Common Money Mistakes // Living Generously, Part 1

A Different Perspective Official Podcast

Money’s a good thing isn’t it? Or is it? I wonder how well you’ve planned your finances. Your day-to-day budgeting, your savings, your retirement savings. Because as things turn out, money is a great servant but a terrible master.

Berni: Alex, great to have you on the program.

Alex: Thanks for having me Berni, great to be here.

Berni: Hey, tell us a bit about what you’re doing these days.

Alex: Yeah, well I used to be a financial planner so I had ... for many years I’ve been giving advice to people both originally as a stockbroker and then as a financial planner. But then I decided, and really God put on my heart, to see how I could help people to really become great stewards with the financial resources that God’s blessed us with.

Now some of us are blessed with a little; some of us are blessed with a lot. It doesn’t really matter. But either way we’re called to use that money that God has given us to honour Him and to glorify Him. So I created ‘Wealth with Purpose’ on the idea of teaching Christians both the biblical principles, which often surprises people to find out just how many principles there are about money in the Bible, and then to actually give it practical application. In other words, how do you actually take the Bible and apply it to your day-to-day life and day-to-day financial management?

Berni: You’re on the right program then, we’ve got the right guy, that’s good. Now in this whole game of being a financial adviser I guess you counselled lots of people and lots of couples over the years.

Alex: Absolutely, I’ve probably spoken to thousands of people now I suspect but in terms of our actual business, we hope, you know, a couple of hundred clients. In terms of helping them with insurance and retirement planning and investments and all that sort of thing.

Berni: The book ‘Rich Dad, Poor Dad’ I think would have made this whole thing quite famous. But over those years of helping people with their finances, what are some of the big mistakes that you saw people make? I guess there are common ones that happen over and over and over again.

Alex: Probably the most common one I think in today’s day and age is lack of savings. You know a lot of people ... young people particularly complain, they say, “It’s really hard to save money”. And I think that comes from our society now is so consumption based that we’ve really gotten away from being a savings culture. In fact, back in the 1970s we used to save 16% of our income. Just prior to the famous global financial crisis it got down to -3%. You know a decade later...

Berni: So that means we were spending 3% more than we were actually earning.

Alex: Exactly and of course racking up debt and that’s not just at an individual level, it’s of course at a government level as well.

Berni: We see that with governments right around the globe, right? They’re spending more than they’re actually getting in tax.

Alex: It’s mind boggling and it’s quite frightening. I think the sort of response to the global financial crisis has simply been governments feel a need to stop any downslide in their economy. They feel under pressure in order to .... getting re-elected and as a result running massive deficits.

Berni: So I think it’s an interesting idea biblically because we’re told that we should be generous, we’re told that we should be giving away sacrificially. There’s the concept of the tithe from the Old Testament and Jesus says ‘Don’t store up for yourself treasures on this earth.’ So how do you kind of reconcile this whole savings thing with what the Bible says?

Alex: Yeah, look, so I think there’s a few ways of answering that. Firstly, I’d make a distinction here between saving versus hoarding. Hoarding I think would be an unbiblical activity. Hoarding is really saving money, if you like, but for something that’s never, ever going to get used. It’s just putting money away, often out of fear – you know, fear that one day it may run out, whereas saving is actually about putting money aside for sensible things in the future. So for example many of us need to fund our children’s education. Even though I actually personally don’t believe in retirement in the sort of convention sense...

Berni: We’re going to talk about that later in the series.

Alex: Yeah, well I certainly think you still need to plan for it to the extent that some point in time you may either be physically unable to work or you get made redundant and so forth. So you still need to have money set aside to allow for the fact that your circumstances change as you age. So in that sense saving is quite biblical and in fact in Proverbs 6 it talks about the ant. That’s the analogy it uses and it talks about the fact that the ant stores away for the future and we need to do the same.

But as I say it’s a balance between saving and actually being generous at the same time. In fact, a really good analogy I use is when I talk about budgeting I give people a very simple rule. It’s called the 80:10:10 rule. So 80% should be for your day-to-day living expenses. 10% is what I call giving to God and really that’s a starting point not a finishing point, everyone’s circumstances are different but that’s a starting. And then 10% for long-term saving. So it’s a really simple model: 80% for living, 10% for giving and 10% for long-term saving.

Now over time as your circumstances change hopefully you can increase the giving. Of course hopefully you can increase the saving as well depending on what your circumstances are and the purpose for which you think God is wanting you to use that money for.

Berni: Young people in particular often buying their own home or their own apartment is beyond them. Young people often don’t think too much about saving, do they?

Alex: They don’t. I think our culture now is so ... as I say it’s so consumer based. We’re attacked almost daily by advertising and so there’s a real sense of discontentment and a real sense of needing to keep up with the Joneses.

Berni: The latest phone, right? The latest bit of technology.

Alex: It’s amazing. Now it’s watches.

Berni: I’m wearing one.

Alex: The Apple watch, there you go. I think people feel under enormous pressure from society to conform in a particular way. And as Christians, you know, we really conform to you know the gospel and to actually try and use what we have to glorify God. So it’s a very different way of thinking. And it’s not necessarily easy because as I say every day you’re getting mixed messages from the world.

Berni: I can’t even walk down the dairy aisle in the supermarket without looking at the floor and seeing advertising messages being thrown at me. It’s happening all the ... the statistics about how many advertising messages we’re hit with a day are outrageous.

Alex: Yeah and I think even when you look at people standing at a bus stop. Half of them these days are on Facebook. Facebook is just now giving them tons and tons of advertising. That’s a problem that’s not going to go away.

But I think the issue for people is to actually step back from it and actually really think about what you’re doing with your money. Actually plan it so rather than having a sort of spur of the moment sort of view of money and just going from one thing to the next, actually sit down and plan it out. Do a budget, actually see where your money’s going.

Berni: That’s probably the next biggest mistake, right? People aren’t saving enough but they’re not deliberate about how they manage their money.

Alex: Yeah and I think most people aren’t even aware of it. They’re not actually aware of where their money is actually going. You know, it feels like they’ve got holes in their pockets so to speak. And so unless we become aware of it, as the first step, and then actually putting what I call, if you like, very simple strategies into place to actually manage it.

So one, for example, is I try and tell people to ... apart from doing a budget which will get you aware, is actually to try and automate your finances. So for example some people get paid weekly, others fortnightly, some monthly. But make it so that when that money comes into your account, set up an automatic sort of feature whereby the money sweeps out into a savings account or into your giving to God account.

And I also say to people that they need to have an emergency fund, that’s one thing. So many people end up with credit card debt because they find themselves in an emergency, they find themselves made redundant or a medical expense or something happens and they haven’t got the money there to help them. And so setting that money aside is very important.

But all of this requires planning. But the good news though for listeners particularly is money is actually quite simple. You only have to do very simple things. Put the building blocks in place, the foundations if you like, and away you go.

Berni: Alright we’re going to talk about that in the next couple of weeks on the program, Alex. Some good insights there. I guess when I was young it was easy to be deliberate because there were no credit cards, there were no overdrafts, when you ran out at the end of the pay period, you ran out at the end of the pay period. So it was a lot easier to plan, whereas now I can just waive my watch in front of the terminal and spend money willy-nilly. And the choice now is mind boggling.

Alex: Yeah.

Berni: By the way, you run an organisation called ‘Wealth with Purpose’ right?

Alex: That’s right.

Berni: Tell us very quickly about that.

Alex: ‘Wealth with Purpose’ was set up really ... I describe it as a stewardship ministry. But really what we’re trying to do is to teach Christians what the Bible says about money, which is an enormous amount, and then put that together with practical application.

Berni: Is there a web address people can check out?

Alex: Yes, it’s wealthwithpurpose.com

Berni: wealthwithpurpose.com. Worthwhile going to have a look. Mate we’re almost out of time. We’ll catch up again tomorrow and have another talk about how we can effectively manage our money in a godly way.

Alex: Fantastic, look forward to it.

Berni: Fascinating stuff and Alex will be joining us again for the rest of this week and next week on the program. That’s ten interviews in all about your money, your finances. It’s such an incredibly important subject for us to think about and get right in our lives. Remember, money is a great servant but a terrible master.