All about the benjamins.

I’ve been trying to get a more balanced approach to responsible personal finance. I tend to zero in on one particular aspect of the topic, much to the neglect of all others. This is especially evident in the luxury posts (1, 2, 3). In any case, here’s how I’ve come to view money in a more big-picture way.

There’s only three ways to consciously spend your money. You either: save it, spend it, or give it. I say consciously because there’s plenty of ways beyond your control, such as taxes, theft, medical emergencies, and other ways. I tend to focus on the spending it portion of this dealio. Saving and giving can be alot less tangible, as most people do not make decisions about such things every day. They also have alot lower instant gratification-ed-ness.

Which, in my observation, we need to be much more vigilant about the two red-headed stepchildren of money, Saving, and Giving. Let’s talk about Saving first.

Saving

The much-neglected of the trinity of the dollar, it has many meanings. Some people, when they hear “saving money”, think of clipping coupons to save 39 cents on a can of soup. Some people think the saving of money to fund some major short-term purchase (down payment of house, car, wedding ring), and finally others think I mean long-term spending for either college or retirement. In this context, I mean the third interpretation, long-term saving…i.e., the holding back of some portion of your income to not be spent in at least 5 to 10 years, usually much longer.

What do we know, on average, about the saving of money? Well, here’s some findings, found in a recent Money Magazine story.

The Employee Benefits Research Institute reports that more than half of workers 45 to 54 have saved less than $50,000 for retirement.

This both motivates and deeply concerns me. It motivates me because, at age 25, it helps me keep in mind the opportunity I have to be responsible for my own future care. It disturbs me, because when all these people retire, it isn’t gonna be pretty. Many of them will have been used to living on 70,000 to 100,000 a year, and will suddenly be in for a rude awakening, that isn’t going to get much better.

On the flip side of this, are passages from the New Testament that makes this all abit more confusing:

And he [Jesus] told them this parable: “The ground of a certain rich man produced a good crop. He thought to himself, ‘What shall I do? I have no place to store my crops.’

“Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store all my grain and my goods. And I’ll say to myself, “You have plenty of good things laid up for many years. Take life easy; eat, drink and be merry.” ‘

“But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’

“This is how it will be with anyone who stores up things for himself but is not rich toward God.” Luke 12:16-21

Summed up, a man found himself in position of great wealth, didn’t know what to do with it, decided to build a bigger place to store it, and chill out. God sez, “well, good idea, except tonight you will die. Way to waste all those monies.” Therefore, be rich towards God, or your fate will be similar.

The danger in this passage is that the line of thinking in the actions of 1. get money 2. save money 3. decide to relax and whatnot sounds dangerously close to the process of the American Dream of retirement. A “bigger barn” in our sense could easily be viewed as an IRA or 401(k), and retiring and spending the days fishing or traveling or reading books sounds very close to “Take life easy; eat, drink and be merry.”

Of course, its crucial to frame all of this naysaying with this parable is very conditional on one pivotal fact: “This is how it will be with anyone who stores up things for himself but is not rich toward God.” v. 21. But just saying that doesn’t resolve us very nicely, as now we get to ponder what being ‘rich to God’ means. I would say at a bare minimum, that we have a responsibility to do two things, right now:

1. Make sure we are not saving more for the unknown future than we are for giving to those who need money now. I’ve spoken at length about how I can’t see how we can spend more on ourselves (above basic needs) than we give away, and given the parable above I think the same rule applies to saving.

2. All money saved has a defined home in the event of our death. Huh? I mean a will. You know, that thing that determines where all your lovely possessions and wealth end up when you die. While your circumstances may vary, a balanced approach would seem to entail a life insurance policy for the wage-earners in your family to provide for the rest of the family if you die, and a will designating that retirement savings for the deceased go to some organization that serves human need, social causes, whatever your definition of “being rich to God”.

Is this being responsible to Scripture? I have no idea. It’s my emerging (ooo I said a scary word) thoughts on the topic, and I would love to hear your input on the topic.

[note: this post was written while drinking a Shiner Bock and listening to Ludacris' hit, "Area Codes", for what that's worth.]

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