This pandemic has been a strange experience. Whilst some of us are struggling more than ever financially, others of us find that we have more at our disposal. No more train fares, no more filling up with fuel, no more sandwich lunches in the local café, no more impulse purchases, no holiday, no theatre or cinema tickets – for once we have more money than month; our bank balance is actually going up!
If that’s you, you have an opportunity to make some great financial decisions and maybe get into super-helpful habits for life. I call it the Savings and Investment Stairway (it’s inspired by the ant in Proverbs 6:6-8 and Jesus’ parables in Luke 14:28) and it provides a brilliant guide for how to plan your finances (during normal life as well as under lockdown). Think of it as a set of stairs you can climb to reach a place of financial independence and peace! Start at the bottom and work your way up.
Step One – Give
Always start with that God-discussion. Lord, how much of what you have given me shall I give away? (In my experience, the 90% left to spend goes further than 100% without giving. It’s God’s maths!) Shall I increase my regular giving, make a one-off gift or add more to my Stewardship account?
Step Two – Deal with the Debt
Overdrafts, credit cards, car loans – pay them off as quick as you can (check that you don’t incur an early repayment charge). If you have a mortgage, consider increasing the monthly payments. With interest rates as low as they are there is no point paying interest on debt if you have cash in the bank.
Step Three – Save for Sleep-Easy
Allow your current account balance to rise until the lowest point it reaches in the month is high enough to cover one month’s spending. For example, if, on average, you spend £2,000 per month, make that the target for the lowest it gets. If you don’t like having that much in your current account, have an instant access account running parallel which always has that £2,000 in it.
Step Four – Save for a Rainy Day
It can take a while but I recommend aiming for between 3-6 months’ spending saved up (a cash ISA is good for this). A rainy day may never come, but then it may. Who would have predicted a national lockdown a year ago? The biblical ant storing its provisions in the good times is deemed to be wise (Proverbs 6:6-8).
Step Five – Save for a Purpose
What are your God-given plans for life? If they cost money, start saving. Weddings, house moves, education costs, car replacement. If you think God has made you for early retirement so that you can give your time to mission (for example), talk to a Financial Planner to work out what you need to save to achieve that goal.
Step Six – Speculate and Donate
You’ve reached the landing! If you have climbed all those steps and still have money left over then you probably don’t need it. Ask the Lord what he wants you to do with it: give it away? Support social enterprises? Financial planners call this the distribution phase and it should be a point of prayer and careful thought.
The fact is that many, many of us are hopping up and down on the first two steps. But knowing what the next steps look like provides a great decision-making framework for good stewardship. We live by faith in God to provide, but we should also look after what he has provided, look up the stairs – and plan ahead.