THE MOST WIDELY read book of all time, the Bible, has a lot to say about money. According to biblical scholars, money and wealth are mentioned more than 2,000 times. Out of the roughly 40 parables Jesus told, nearly half speak of money.
Why does the Bible make such a big deal about money? The answer belongs in a Sunday sermon, not here. Still, I believe there’s a great deal to be learned from what the Bible says about money.
Below are eight verses, all written by King Solomon. Solomon was the wealthiest man of his time. But he was also renowned for his great wisdom. Although he lived almost 3,000 years ago, his insights on money and wealth remain relevant today. Here’s Solomon on money:
1. “A wise man thinks ahead; a fool doesn’t, and even brags about it!” (Proverbs 13:16)
While this applies to life in general, it also has huge implications for our finances. Do you know what you would do if a severe recession knocked down the value of your stocks by 40%? If you lost your job, do you have a rainy-day fund to see you through the next six months? Have you thought about the retirement you want and when you want it?
The notion of retirement didn’t even exist in Solomon’s time. Thinking ahead is even more important today—and, thanks to the magic of compound interest, planning early pays enormous dividends.
2. “Lazy hands make for poverty, but diligent hands bring wealth.” (Proverbs 10:4)
This one isn’t rocket science, but sometimes we need to be reminded about the simple stuff. If you’re a student, are you applying yourself diligently? The greatest financial investment you can make while in school isn’t a Roth IRA, but your own education. If you’re in the workforce, are you developing new skills or simply coasting? More than ever before, if you aren’t advancing your skills, you’re becoming obsolete.
In finance, we are so obsessed with maximizing returns that we forget that the two fastest ways to increase our net worth are by earning more income and by saving a greater proportion of it. You can achieve the former by working harder and by sharpening your skills, so you’re more valuable in the workplace. Both require diligence.
3. “Just as the rich rule the poor, so the borrower is servant to the lender.” (Proverbs 22:7)
The Bible doesn’t mince words: Whenever I borrow, I’m setting aside a portion of my future wages to service that debt. In effect, I am working for the lender—the credit card company, the bank and so on—until my debt is paid off. Certainly, some forms of debt can be beneficial. Mortgage debt and student loans come to mind. Still, before borrowing, ask yourself: What future freedoms am I giving up by taking on this debt?
4. “The wise store up choice food and olive oil, but fools gulp theirs down.” (Proverbs 21:20)
When it comes to personal finance, there’s really nothing new under the sun. After all, this was written about 3,000 years ago. I believe 90% of our financial problems go away if we just learn how to save, especially from an early age. I have made my share of investing mistakes. But the one saving grace in my financial life has been the ability to save consistently. The Bible says, “Love covers over a multitude of sins.” In personal finance, there’s a corollary: Saving money covers over a multitude of financial sins.
5. “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon land.” (Ecclesiastes 11:2)
Solomon is referring to shipping ventures, which in ancient times were high risk, high reward undertakings. By investing all of your money in one ship, you could make several times your money or you could lose it all. Sound familiar? Betting all your money on one stock could make you fabulously rich—or leave you broke. The investing principle is clear: diversify, diversify, diversify. Ignore this at your financial peril.
6. “Dishonest money dwindles away, but he who gathers money little by little makes it grow.” (Proverbs 13:11)
Promises of high returns, with little or no risk, are often made. While alluring, such thinking totally contradicts one of the fundamental laws of finance: To achieve higher returns, you must also assume higher risk. Those who invested with Bernie Madoff learned this principle the hard way.
7. “Pride goes before destruction, a haughty spirit before a fall.” (Proverbs 16:18)
Humility is an underrated virtue in finance. Humility is acknowledging that we can’t pick stocks that will outperform, so we buy index funds. Humility is realizing that we can’t predict the direction of markets, so instead we dollar-cost average and simply buy and hold. Humility prevents us from deluding ourselves into thinking that we’re the next Warren Buffett during raging bull markets. Instead of pouring even more money into our winners, humility leads us to rebalance our portfolio. In short, humility keep us from taking unnecessary—and likely uncompensated—risks, allowing us to outperform overconfident investors over the long run.
8. “The generous will themselves be blessed, for they share their food with the poor.” (Proverbs 22:9)
You’ve heard the saying, “Money is the root of all evil.” While this comes from the Bible, it has been misquoted. The actual verse: “The love of money is the root of all evil.” It’s all too easy to pursue money as an end in itself, rather than as a means to an end. We start out loving what money can provide for us—vacations, nice cars, financial security—but end up falling in love with money itself. When asked how much money was enough, billionaire John D. Rockefeller replied, “Just a little bit more.”
How can we rectify our relationship with money? I believe the answer is to give some of it away. Giving to the needy is a genuinely good thing to do. But surprisingly, the act of cheerful giving also confers many benefits upon the giver.
First, generosity loosens the grip of materialism on our lives. By giving money away, you demonstrate mastery over it. Money loses its control over you when you give it away. Second, giving money to causes you care about brings joy. I think this has to do with how we’re wired as human beings. Compassion and a need for social connection define us. We are better together. I don’t think it’s a coincidence that the word miser and miserable share the same root. Misers often are miserable.
The third, and most important, reason to be generous is—in my opinion—based on the Christian notion of stewardship: I give because God gave to me first. I have received so many gifts: my intellect, abilities, drive, physical health, the good fortune to be born in America, the family I grew up in, the people who entered my life. These gifts enabled me to build the wealth and security I have today. Since I am merely the steward of what I’ve been given, I give back in gratitude.
Limited time offer: Get the audiobook version of Jonathan Clements's "How to Think About Money" at the special pre-release price of $12—a 40% savings. For more information, click here.