Should your faith affect how you spend your money?
Personal finance is just that: personal. It is closely tied to our decision-making, thinking, values, goals, and even just enjoying life. That’s probably my favorite part about writing about money — it’s adjacent to dozens of other subjects that are all tied together in our lives.
One area that’s important in my own life is faith. My faith relates to finances because it affects my priorities and what I value in life. I’d like to dive in and discuss this today.
Is saving for the future the top priority?
I feel tempted to be “all in” on saving and investing so the SR Wife and I can leave our full-time jobs earlier. If that’s the goal we’re working towards, we should be doing everything we can to expedite it, right?
But, there’s an opportunity cost to approaching life that way. Dollars devoted to a future retirement are necessarily not being spent on unique life experiences, traveling, or giving.
Ultimately, how you spend your time and your money is a reflection of what you value.
Does becoming wealthy change you?
It’s tempting to think “Well, I’ll give to causes and organizations I care about later in life, once I’m wealthier. I just don’t have the extra money to do that now.” To me, there are two flaws in this thinking.
1. There’s an assumption that there will be a “later.” That’s not guaranteed, so, frankly we shouldn’t treat it as an absolute certainty.
2. There’s an assumption that if we actually reach that “later,” things will be different.
I’ve heard it said that having more money doesn’t change who you are, it only magnifies who you were already. I’ve seen this to generally be true. A good illustration of this, to me, is lottery winners or highly-paid professional athletes. People often mis-manage their wealth if they were not financially literate before suddenly becoming wealthy — many even go bankrupt. For example, a 2010 study showed that the bankruptcy rate for lottery winners in Florida was nearly twice as high as regular Florida residents. Another study shows that NFL players have a similar bankruptcy rate to the general population, despite earning much higher incomes.
Speaking of which, I believe that a lack of financial literacy and related resources is a huge problem in our society. Recent data that collected and analyzed on this site showed that available personal finance resources are not reaching society as a whole — we’re only reaching a limited segment.
This “becoming wealthy doesn’t change you” concept relates to the personal finance concept of lifestyle creep, too. The idea here is that even if your income rises significantly, by 50% for example, it tends to be difficult to save any more than you were saving before. Mathematically, this doesn’t make sense — you have more money, so you should be able to save more of it. But in practice, most of us tend to raise our spending levels proportionately. After that 50% raise, it’s easy to just spend 50% more on eating out, on rent, on a newer car, etc. That additional income didn’t change your spending habits.
The SR Wife and I recognize that (1) we may not live long enough to gain what I would consider to be life-changing wealth and (2) even if we do, it probably won’t really be life-changing. Therefore, we try to give time and money now to the things that we value.
So what is it that we value?
Faith — what I believe
This is the quick version of our worldview: as Christians, we believe that we receive love from God every day that we don’t deserve. That inspires us to love other people and to be generous with our own resources.
If you’d like to talk in detail about this, feel free to contact me.
If we say that we have faith and want to help other people, we need to show that now, not just later when we’re wealthier and semi-retired.
We don’t want to plan our lives around the idea that gaining more wealth will change what we value most, and that we can only be generous later in life. If anything, we want our budget to be an illustration of what we presently value.
That’s really what the early retirement movement is all about, in a way. People are saying that they value their financial freedom more than the other things they could be spending their money on. Your budget shows what you value.
What we’re doing
For the SR Wife and me, we are actively involved in a church near where we live. We give money monthly to the church, and we volunteer in the nursery to help with childcare.
I’ve mentioned in other posts that we’re interested in adopting in the future. In part, we’re motivated by our faith. The picture of love that we see in Christianity inspires us to want to show that same love to other people.
We give about 10% of our gross income to our church. We understand that doing this will delay our retirement, compared to saving that additional 10%. But we’re okay with it. Personal finance is personal.
So yes, our faith does affect our finances! And I think it should. We don’t do it perfectly. We’re constantly struggling to find the balance between spending and giving to what we value now versus investing for the future.
Does your budget reflect what you value most? How do you find that balance?