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I CAN ALREADY HEAR the groans. “Oh brother, here we go again with another of those religious wackos. I’m glad I don’t have to worry about all of that faith-based nonsense. My finances have nothing to do with faith.”
Really?
How about the guy spending his last dollar on a lottery ticket at the corner market? Or the victims of Bernie Madoff? Or the 65-year-old Enron employee fully invested in company stock in summer 2001? I would suggest that their beliefs played a major role in how they handled their finances.
I wrote this blog at the request of HumbleDollar’s editor (whose name I muttered in vain many times during the article’s writing). Knowing my religious convictions, he was curious to read my take on faith-based money management. Fear not: I have no intention of proselytizing and I’m not sitting in judgment of anybody (except perhaps the aforementioned editor).
I would, however, contend that all of us invest on faith. The financial strategies you use are likely based on data collected over less than a single lifetime. If even the venerable Jack Bogle can be taken by surprise, why are you and I so confident in the future? Perhaps faith has something to do with it.
In 1521, the Protestant Reformers labeled three essential, comprehensive elements of genuine faith:
You may learn (notitia) that a stuntman plans to push a wheelbarrow across a cable suspended high between two city buildings. After examination of the performer’s skills and history, you may believe (assensus) that he is able to perform the stunt. You may even become so confident (fiducia) that you offer to get in the wheelbarrow.
Most of us are acquainted with (notitia) the idea that stocks rise over time. After careful study, we may agree (assensus) that investing in stocks is likely to produce a good return. Finally, we may invest our assets (fiducia) in stocks with expectation of financial reward. What’s my point? There’s an element of faith in all our decisions, financial and otherwise.
Those of us of the Christian persuasion, who take the Bible as our source of objective truth, have a host of guidelines with regard to money. Admittedly, there isn’t universal agreement on these guidelines. Still, many Christians would accept the following 13 principles:
1. I own nothing. The foundational principle is that we are stewards, not owners, of wealth and material possessions. “The earth and everything in it, the world and its inhabitants, belong to the Lord; for He laid its foundation on the seas and established it on the rivers.” (Psalm 24:1, 2)
2. Work and wisdom are key elements of true prosperity. The Proverbs, in particular, are filled with references to the value of diligence and reliance on good advisors. “He who works his land will have abundant food, but the one who chases fantasies will have his fill of poverty. The man who wants to get rich quick will quickly fail.” (Proverbs 28:19, 20)
3. Debt is not prohibited, but it’s fraught with peril. All debt requires presumptions about the future. No individual, organization or government can ignore the realities of debt. “The rich rule over the poor, and the borrower is slave to the lender.” (Proverbs 22:7)
4. You must provide for the needs of your family. Many would agree that this includes the need for proper insurance. “But if any provide not for his own, and especially for those of his own house, he hath denied the faith, and is worse than an infidel.” (1 Timothy 5:8)
5. We should reflect the generosity we have received. The idea of the tithe (literally, tenth) goes back to the roots of the Judeo-Christian faith. It acknowledges the value of those who serve the needs of others and the abundance with which we are blessed. “Remember this: The person who sows sparingly will also reap sparingly, and the person who sows generously will also reap generously. Each person should do as he has decided in his heart—not reluctantly or out of necessity, for God loves a cheerful giver.” (2 Corinthians 9:6, 7)
6. The most vulnerable among us are called out to receive special care. We can’t ignore the needs of those without resources. “Pure and undefiled religion before our God and Father is this: to look after orphans and widows in their distress and to keep oneself unstained by the world.” (James 1:27)
7. Taxes are to be paid to legitimate governing authorities. We are accountable for paying what is required by those placed in authority. “And for this reason you pay taxes, since the authorities are God’s public servants….” (Romans 13:6)
8. Not enough is bad, but too much isn’t always better. Too little or too much wealth can create unfortunate consequences. “Give me neither poverty nor wealth; feed me with the food I need. Otherwise, I might have too much and deny You, saying, ‘Who is the Lord?’ or I might have nothing and steal, profaning the name of my God.” (Proverbs 30:8, 9)
9. There is wisdom in planning. This is true for building towers—or for quality of life in retirement. “For which of you, wanting to build a tower, doesn’t first sit down and calculate the cost to see if he has enough to complete it? Otherwise, after he has laid the foundation and cannot finish it, all the onlookers will begin to make fun of him, saying, ‘This man started to build and wasn’t able to finish’.” (Luke 14:28-30)
10. Diversification reduces risk. Mutual funds offer an easy way to diversify—though there’s more to diversification than owning a bunch of different stocks and bonds. “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.” (Ecclesiastes 11:2)
11. We are to conduct business with integrity. There is no surer way to make a mockery of your “faith” than to be deceitful or unethical. Examples, unfortunately, abound. “Honest balances and scales are the Lord’s; all the weights in the bag are His concern.” (Proverbs 16:11)
12. Money isn’t everything. Certain celebrities seem to support this principle by leading miserable, if well-funded, lives. “Better a little with the fear of the Lord than great wealth with turmoil. Better a meal of vegetables where there is love than a fattened calf with hatred.” (Proverbs 15:16, 17)
13. We are all ultimately accountable. This is where a lot of people get uncomfortable and turn away. I can hardly blame them.“From everyone who has been given much, much will be required.” (Luke 12:48)
To be sure, application of these principles can get rather messy. For example, all else being equal, I would prefer to share my resources with those who share my faith. But if the roof is leaking or the toilet won’t flush, a skilled Scientologist can be a welcome gift from God.
The bottom line: Our financial decisions reflect our faith. What do your choices tell you about the principles you believe in?
When not paddling, biking or shooting, Phil Dawson provides technical services for a global auto manufacturer. He, his sweetheart Donna and their four extraordinary daughters live in and around Jarrettsville, Maryland. His previous articles include No Exit, A Most Morbid Game and Sound Investing. You can contact Phil via LinkedIn.
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What a breath of fresh air, thank you Phil! I was doing the MBA thing in the early 80’s and remember being amazed at how often biblical concepts were taught under different names.
Your last paragraph is eye opening – Jeremiah 17:9 says that no one really knows their own heart and that’s certainly proven true in my own life. One’s choices and actions are the primary indicators – especially under pressure.
Fresh out of school I remember sitting at the kitchen table at my Dad’s house on October 19th 1987 and talking to him about what was going on in the markets. He was a tax lawyer with significant investments – in the millions. I said “Dad! Isn’t this terrible!?” and he said, son this is one of the happiest days of my life – please let me get back to the phone I have so much to buy today”.
I love the story about your Dad!