As a longtime investment advisor, I often hear the question, “What is the number one financial mistake many investors make?” My answer is always the same: they ignore biblical wisdom when managing their money and instead follow secular wisdom.
Do you believe this? Have you ever thought that by being guided by God's protecting biblical principles, you will be able to manage your financial resources more wisely and prudently—and at the same time glorify God? I know because I lived it. From the early 1970s to the mid-80s, I relied primarily on my skills and intelligence to make financial decisions. I had successes, but more failures.
In the late 1980s, I faced my limitations and turned to the teachings of Larry Burkett, who has become a leading voice for Christians on the importance of applying biblical interest rates to financial management. Synchronizing with God's ways, not mine, laid the foundation for future financial success. Here are some of the principles that I have found to work whether you have a lot of faith or a little:
We should rely first on God's wisdom when making decisions. God-given principles are practical and relevant, often at odds with conventional “wisdom.” “All Scripture is given by inspiration of God, and is profitable for teaching, for reproof, for correction, for training in righteousness” (2 Timothy 3:16).
We must take personal responsibility for our decisions. We cannot count on others to make difficult choices for us. We have a responsibility to make informed, biblically consistent financial decisions. “It is required of stewards that everyone should be found faithful” (1 Corinthians 4:2).
Debt can be enslaving and should be avoided if possible. Whether it is an individual, a company or a nation, debt can destroy freedom and prosperity, take away independence and reduce what can be done with the financial resources that are earned. “The rich rule over the poor, and the debtor [becomes] the slave of the lender” (Proverbs 22:7).
It is advisable to maintain the right balance between current expenses and long-term savings. Our spending decisions should always be tempered by the knowledge that some of these resources may be needed in the future. If we spend everything now, we will have nothing left for future needs and emergencies. “The desired treasure and the fat are in the house of the wise; but a foolish man wastes it” (Proverbs 21:20).
We must invest consistently using a carefully thought out strategy. Some people invest impulsively, sporadically, rather than deliberately formulating a wise strategy and sticking to it. “The mind of the diligent man strives for abundance, but everyone who is hasty suffers want” (Proverbs 21:5).
We must rely on diversification in our investments. Too often, investors become preoccupied with market cycles and become caught up in unpredictable changes. Diversification is a good means of controlling risk and protecting capital. “Give part of seven and even eight, because you don’t know what trouble will be on earth” (Ecclesiastes 11:2).
When we “renew our minds,” as Romans 12:2 says, by using and following these and other proven biblical commandments, we can be confident that we are making wise choices about spending, saving, and investing.
Austin Pryor has more than 40 years of experience advising investors. He is the founder of Sound Mind Investing and the author of “The Common Sense Guide to Investing,” which has been endorsed by many respected Christian teachers and has sold over 100,000 copies. Austin lives in Louisville, Kentucky with his wife Susie.
Questions for reflection/discussion
NOTE. If you have a Bible and would like to read more, consider the following passages. Proverbs 3:27-28, 11:24-25, 14:31, 15:16, 22:2,26-27; Matthew 6:19-21,33; 1 Timothy 6:6
