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Looking for some frugal financial wisdom? It's pretty hard to go wrong when your teacher is one of the wisest and wealthiest men who ever lived: King Solomon. King Solomon's proverbs aren't dusty maxims from the past; wisely applied, they are practical, precise advice as current as what you can find from a financial planner today. Here are five tips you can start applying today. (All proverbs unless otherwise noted are from the New Living Translation of the Bible.)
Strategy 1: Work Hard and Save Your Money Over Time.
Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time.
Proverbs 13:11 (NLT)
Ever notice how the spare change saved in a jar just grows and grows, but your Vegas winnings sprout wings the instant they're won? The best way to get rich is to save consistently. Putting aside 10% of every paycheck is a good place to start, and direct deposit makes it even easier to set aside. Even if you have as little as $5 or $1 to spare, put it away. Some financial experts recommend starting with a $1000 emergency fund and building it up to three to six months' income. Don't give up! It will grow.
Strategy 2: Avoid Cosigning on Loans; Better Yet, Don't.
Don't agree to guarantee another person's debt or put up security for someone else. If you can't pay it, even your bed will be snatched from under you.
Proverbs 22:26-27 (NLT)
Agreeing to cosign a loan (even with a trusted friend, relative or your child) can become a sticky situation, especially if that fellow cosigner cannot pay. When you co-sign, you need to be extremely careful to make sure that the cosigner will be able to pay the whole debt. For example, if your kid defaults on their loan payments, the lender will run to you, expecting their money. They don't care that you're trying to support a family, saving for retirement, just barely scraping by, etc. They just want the money and will snatch your "bed" away if they must.
Strategy 3: Where Possible, Don't Use Credit and Loans to Buy What You Can't Afford
Just as the rich rule the poor, so the borrower is servant to the lender.
Proverbs 22:7 (NLT)
Strive to be debt-free. There are some situations where some debt might be taken on, such as a home mortgage or a school loan. But even in those cases, be discerning about what you can afford and borrow as little as possible. Cash is the best option since you see where the money goes. Credit cards make it easy to spend more than we have, especially if you buy into the idea that "more" is better. However, the more you have to borrow, the more you have to pay. And if you have any existing debt that you want to kill, try the "snowball" method. Start with the smallest debt, pay over the minimum as much as you can afford, and pay the minimum on everything else. Once that debt is paid, "snowball" (add on) that amount to the next smallest debt.
Strategy 4: Work Hard and Well, and Plan Your Vision
A hard worker has plenty of food, but a person who chases fantasies ends up in poverty.
Proverbs 28:19 (NLT)
Do you see any truly competent workers? They will serve kings rather than working for ordinary people.
Proverbs 22:29 (NLT)
You get what you give. And if you give nothing, expect nothing. Look at the farmer who plants a crop. He tends it carefully to ensure it brings a good harvest. Your attitude towards your work also says much about you. You might not be the most talented in your abilities, but if you have drive, it will help you to become thoughtfully competent, and that will be noticed. Make a point to plan your life and vision so you will bring in a "good harvest" and "serve kings."
Strategy 5: Be Generous with Your Resources: Give Joy.
Cast your bread upon the waters, for you will find it after many days.
Ecclesiastes 11:1 (ESV)
Give freely and become more wealthy; be stingy, and lose everything. The generous will prosper; those who refresh others will themselves be refreshed.
Proverbs 11:24-25 (NLT)
Ironically, yet refreshingly, wealth multiplies when you share it. We all know this but often fall into the temptation to hoard and be selfish. How many stories have you heard of a wealthy person who refused to give, and then ended up with nothing? Where possible, be generous with your time, money and resources. Make a difference, even if it's just smiling today. This life we live is one to be shared with others. What "bread" are you holding onto that could be spread among others? Don't worry. It will return to you again someday.
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