10% - Save
10% - Give away
80% - Learn to live on
Why is something so simple and so obvious so hard?
Og Mandino wrote several books on the subject that were awesome. Crown Ministries and Dave Ramsey, the personal financial guru, have devoted years and years to this formula, and yet as we speak, I received a call that offered to lower my interest rate on my single credit card. I did not qualify, since I DID NOT owe over $3,000. Really! Silly me, I must have forgotten that for everything else there’s MasterCard, as in debt is your master.
Of course, the financial world is awash in debt and governments are playing high stakes chicken as each prints more paper money and dares the other not to hold their debt. Nice role model.
As counter intuitive as it may seem, the ultimate freedom and enjoyment come from “acting your wage” as Dave Ramsey puts it. Acting your wage is really the starting point to tap into some universal truths of financial happiness. First, God the creator of the universe, which includes ALL you currently possess, has only challenged us to test HIM on ONE single action, giving. Regarding giving 10% in Malachi 3:10, God says “…Test me in this…and see if I will not throw open the floodgates of heaven and pour out so many blessings that you will not have room enough to store them.” Since I can’t figure out how to even make a blade of grass, why would I want to say, “I don’t believe the Creator of grass and everything else?” So for me, that promise is Priceless and for everyone else there’s VISA.
The problem is that we are taught to confuse possessions with blessings. Let me illustrate. Ever notice that when natural disasters force quick evacuations, people rarely choose the flat screen TV first? No, it’s usually items like pictures or sentimental items that remind them of the important possessions they own: relationships. Once you grasp the enormity of what blessings are compared to possessions, why would you ever turn down God’s offer?
Of course, now we approach the second hurdle. George Clason in his book, The Richest Man in Babylon, referred to saving 10% as paying yourself first. I like that. You trade your life for money, and the world tells you that you own your paycheck. But think about it. The government owns 15-50% of your life based on what they take out. The bank or your landlord owns 25% of you. The grocery store owns 20% of you. You pay all of them before you pay yourself any money. Why not decide that you are worth some of your life’s work and pay yourself? It’s called saving.
One of the saddest statistics I see is the negative savings rate of my baby boom generation. Rather than pay ourselves, most of us borrowed on our “supposed” equity in our homes to finance more stuff. Now that we are almost too old to do anything about it, we realize that equity was just inflation caused by overprinting of money and government guarantees of overly risky borrowers. So here we sit with debt and no way to pay it off. My sadness comes from knowing what could have been. Let me show you what could have been if you followed this rule:
If you saved 10% for 30 years at 6% (half the returns on stocks over the last 30 years), look where you’d be:
Income Savings Value in: 10 yrs 20 yrs 30 yrs
$20,000 $2,000 $28k $78k $168k
$40,000 $4,000 $56k $155k $335k
$60,000 $6,000 $84k $234k $503k
What this illustrates is how the law of compounding works. Even at 6%, your money triples in 30 years and doubles again in 10 more years. So, if you only made $20,000 a year for your entire 40 year career, you could retire with over $328,000 which at 6% would give you $20,000 a year for life. Pretty slick for only $5.50 a day. Now that’s the kind of “life” insurance I want.
So if you have the CEO of the universe offering an abundance of blessings, and you know you could retire on your current income for $5-20/hour, wouldn’t you have some long-term peace of mind? And with that long-term peace of mind, you have a chance to practice number three, live within your means.
Acting your wage is only hard if you don’t have the first two covered. If you don’t trust God in His Word, and you don’t allow money to work for you (compounding), is there ever enough stuff to really give you peace?
Now here’s the kicker: The less you have, the easier this is. Go on a mission trip to the “third” world and notice the happiness/peace quotient in the people of those countries. They don’t worry about not recording or worse, missing a football game on ESPN. They understand the meaning of daily bread. And they really understand the blessings of relationships. So we “affluents” go to be a blessing to those less fortunate and more times than not, we come back feeling like we were blessed by their example. They understand the real blessing of acting your wage. They have freedom. They are free to focus on what matters most, relationships with God and their fellow man.
Don’t read this as an indictment on prosperity. I truly believe capitalism, a system of voluntary exchange, is God’s system. It rewards those who provide the most good for the most people. But don’t confuse capitalism with what we have in the United States today. It’s just that without a full understanding of what provides possessions and without a prospering soul, we will never find that “sleep like a baby” peace we all seek.
Because when stuff is the source, stuff is never enough. Ever known a wealthy person who is unhappy, worried about everything, or depressed because someone they know is more affluent? A recent study confirmed that most people define well off as an amount greater than their current financial condition.
And isn’t that what we all seek? So go ahead and act your wage, pay yourself, test the Creator, and watch what happens. Peace:)