8.2 Principles of Savings

Viv Grigg, Feb 2017Using some slides from emurfield on slideshare

Review of Management Principles1. Increase your Income2. Break the power of the loan sharks3. Control your expenses

3.1 Keep a daily record of expenses. 3.2 Prepare a weekly or monthly budget. Use this

to work out what you need to cut. 3.3 Record weekly income and expenses and

summarize monthly. 3.4 Develop a monthly /yearly balance sheet.

Can You Believe?

Almost 60% of teens follow a 50/50 plan: half of any money received is spent, and the other half goes into savings.

Review: What Is A Budget?A budget is a plan for managing

money during a given period of time.

Income: Any money coming in

>What’s the difference between gross income and net income?

What Is A Budget?Expenses: The money you spend on your needs

and wants; Money going out

>What’s the difference between fixed expenses and variable expenses?-Fixed expenses have set dollar amounts and are the exact amount every time (Ex: Rent or car payment)

-Variable expenses can change, which means you have more control over them (Ex: What you spend on car gas or entertainment)

Benefits of a Budget Will help you live within your means

Can help you save toward important goals

Forces you to evaluate and modify your spending patterns

Personal BudgetTwo Main Parts:1. Income2. Expenses

One must balance the two in order to avoid debt.

Review: Building Your Own BudgetStep 1: Consider Financial Goals Write down long-term and short-term goalsStep 2: Estimate Income Think about net income as well as other sources

of incomeStep 3: Estimate Expenses Look at previous billing statements Take note of fixed and variable expensesStep 4: Develop a Trial Budget Fill out what you expect to earn and spend, then

record actual income and expenses

Biblical Basis for Savings There is a time to save and a time to spend (Ecc 3:1-9). We all save, even if we only save our salary for a few

days. We are to follow the example of the ant (Prov 6:8).

During a time of abundance, we should put aside money for the lean years. The wise person saves for the future, but the foolish spends whatever he gets… (Prov 21:20).

Life Stages and Savings As incomes increase, consumption tends to increase

proportionally. keep a shrewd eye on how to live simply, and maximize savings, and giving at every stage of life.

funding of tertiary education cost of a wedding buy a house own your own business Kids college Retirement

Who Provides? The godly man thus provides for his retirement, for his widow and

leaves an inheritance for his children (Prov 13:22). Churches need to provide systems of support in financial decisions like these. in budgeting processes. The modern state needs to provide stable infrastructure to sustain employment, accessible house prices that enable home ownership for all education that does not end up with a generation in deep debt. A safety net for the poor and elderly

Savings and Blessing Remember, one can follow all practical

steps but unless the blessing of the Lord is on our finances, we will struggle. Make sure daily you are meeting him, and there is no sin barrier between you and him. Then your prayers will be answered as you seek his will and his provision (John 15:7).

Steps in the Practice of Savings

1. At all stages, put aside enough for an emergency fund first.   When you have little, this may seem a strange practice. 1 week initially Build to 3 months

My grandma used to use a teapot.

Capital Expenses Save for foreseeable or

major capital expenses a piece of furniture, vehicle,

education, Christmas, your daughter’s wedding, a car repair (it will come).

Do not plan to buy on credit, but when you have the money saved up.

Save for Milestones College education Marriage Home Kids College Retirement

Give: Savings for heaven

Tithing principle: There is a rule of thumb - save 10%, Give 10%. Andrew Liuson 10:20:70 principle. Give10%, save20%, spend70%

This leads to the Lord’s blessing. Abraham, as he gave to Melchizadech, the priest (Genesis 14:18-20).

Part of tithing for the poor. A large part of tithing in the scriptures is to the poor. Some estimate it as about 30%. In Acts 2 and 4, it was given to the apostles to distribute to the poor. leave the edges of our crops.

Part of tithing for the local church The priests also were to receive offerings and Paul tells us that “a labourer is worthy of his hire”, so giving a % to your church is also important.

part for apostolic advance in missions. Many of us use some of that to support those on the forefront of the church globally.

Freedom in Giving Resist the pressures of pastors

who put bondage on their flock by demanding that tithes be paid

that gifts to the poor or to missions are above and beyond those tithes.

These are extra-biblical teaching. Paul was very gentle with people, encouraging

them to give, but teaching that it must be done freely out of a generous heart (2 Cor 8 and 9).

Savings and BudgetsStep 5 in Budgetting: Plan for Savings Aim to save anywhere from 3 to 9 months’

income to cover emergencies Further savings should be invested

appropriately Add these to your budgetStep 6: Plan for Giving This goes at the top, take 10% of your

income. Assign it to missions, the poor, the local church

The Envelope System1. Label an envelope

for each spending category (savings, food, gas, entertainment)

2. Record the planned amount on the appropriate envelope

The Envelope System3. As you receive money,

place the planned amount in each envelope

4. When you need to spend money, take cash out of the appropriate envelope

5. When an envelope is out of cash, you’re done spending for that category!

5 Future Certainties for which you need to SAVE Your Money!

1. Emergencies

2. Expensive Purchases

3. College for Kids

4. Retirement

5. Special Goals

One Future (Un)Certainties for which you need to (not) SAVE Your Money!

1. Eternal Life Put your money on ahead of you as you give to the Kingdom. It’s the best savings deal you can get

2. Don’t save to amass a fortune

Do not store up for yourselves treasures on earth… (Matt 6:19-21)

Resources In the Philippines

Liuson, Andrew. (2015) Free Lifestyle: Ten Principles that Can Revolutionize Your Life. Manila: Cross Over Books.

In the US Ramsey, Dave. Financial Peace University Use www. mint.com as a way to manage your

budgeting online. In New Zealand

Liberty Trust. www.libertytrust.org.nz Christians Against Poverty. www.capnz.org