- Personal Finance
7 Biblical Financial Principles
An Introduction to the Proverbs
Proverbs, a collection of highly valuable teachings and sayings written by King Solomon in about 900 B.C., contains some of the most useful financial principles that can still be applied one hundred percent to our lives in 2014. Whether you profess to be a Christian or simply landed upon this page because you are interested in making sound financial decisions, this article will objectively address seven key financial areas that are stressed multiple times in the Proverbs. Ultimately, proper application of these principles can lead to financial freedom and a steady growth of wealth over time. Let's begin this exciting financial journey into the Proverbs, the ultimate finance textbook.
Principle #1: Create a Financial Plan and Establish a Board of Advisors
I started with planning and advising as the first key principle that is taught in the book of Proverbs because I believe that a well-thought out plan is the foundation for executing all the other ideas concerning finance that are discussed in Proverbs.
In business, all organizations possess detailed plans and goals for their company in terms of both profitability and direction for the future. Additionally, all businesses have some hierarchical structure that consists of a small group of leaders at the top that influence key decisions in their respective fields of expertise. In the same way, managing our personal finances should be very similar to that of a business model. First and foremost, we must have a plan with financial goals clearly laid out. Secondly, it is important to have a core group of advisers that you can trust. By advisers, I mean highly trusted individuals in the community that are highly skilled and specialized in what they do concerning their area of finance. I recommend a specific adviser at the local branch of your bank, an investment portfolio adviser, an insurance agent, one friend that you trust, and finally one other highly respected member in the community that may or may not be a friend. On Dave Ramsey's website, he has listings for individual communities that will reveal endorsed local provider's (ELPs) of these various financial services which are a great place to start because these provider's can be trusted.
Let's get right into some specific passages that Proverbs reveals about planning and seeking advice. My personal favorite is Proverbs 15:22 which reads, "Plans fail for lack of counsel, but with many advisers they succeed." Without some form of outside advice, plans will ultimately fail because we need guidance so that we can understand potential problem areas in our finances before they take deep root. Another key verse on advice comes from Proverbs 19:20, "Listen to advice and accept instruction, and in the end you will be wise."
Here is a deeper list of every passage in Proverbs that discusses planning or advice:
Proverbs 6:8, 10:5, 11:14, 12:15, 21:5, 24:27
Principle #2: Financial Responsibilities to Self & Family
The proverbs provide numerous insights for being financially responsible through working hard and diligently. In Proverbs 10:4, the saying goes, "Lazy hands make a man poor, but diligent hands bring wealth." For the sake of our families, we are called to work with our full effort in all that we do. It is our financial responsibility to provide for our families even if the work is not fun or easy.
I also want to emphasize that is is our responsibility to practice good judgement in finance because "get rich quick schemes" do not exist. Proverbs 12:11 says, "He who works his land will have abundant food, but he who chases fantasies lacks judgement."
Other verses in Proverbs relating to our financial responsibilities:
Proverbs 6:9-11, 10:22, 12:27, 13:7, 14:23, 16:26, 20:4, 20:13, 24:3-4, 27:23-27, 28:19
Principle #3: Giving
In Proverbs, Solomon makes it clear that a key aspect of gaining wealth and prosperity comes from doing just the opposite. God makes it clear that we are stewards or caretakers of everything that has been entrusted to us on earth. Therefore, we are to first honor God with our possessions by giving the first or best portions of our income to God. If we are faithful in giving, God promises to continue to provide for us. Proverbs 3:9-10 states, "Honor the Lord with your wealth, with the first fruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine.
Some other verses to consider about giving:
Proverbs 8:21, 11:24, 11:25, 11:26, 18:16, 19:17, 23:6-7
Principle #4: Borrowing and Lending Practices
Five key verses directly refer to borrowing and lending money in general, and they are all very clear on the dangers of lending and borrowing. For instance, Proverbs 22:7 claims, "The rich rule over the poor, and the borrower is servant to the lender." I personally do not think borrowing or lending is non biblical, yet proverbs warns borrowers of getting into obligations with another because an inability to repay a loan ensnares and creates a deep hole to dig out of. It is better to save and pay with money that you already have rather than having a debt to another.
In another instance, Proverbs 28:8 states that we are not to charge "exorbitant" or excessively high interest in making loans to borrowers because they are seemingly building empty wealth that should be distributed to the poor rather than the wealthy.
More verses on borrowing and lending
Proverbs 6:1-3, 11:15, 17:18, 22:7, 22:26-27
Principle #5: Saving and Investing
Saving is a key financial principle stressed in the Proverbs because when we save we are being good stewards of what God has provided to us. Proverbs 13:11 says that the person who "gathers money little by little makes it grow." Later in chapter 13, Solomon also calls a wise man to save and invest so that he "leaves an inheritance for his children's children." God doesn't command us to save to buy more "stuff" for ourselves on earth, but rather we save so that God's blessing given to us can be fully maximized and enjoyed by the generations to come.
Solomon paints a beautiful picture of a wise investor in Proverbs 21:20: "In the house of the wise are stores of choice food and oil, but a foolish man devours all he has."
Principle #6: Social Injustice
The proverbs focus multiple times on how it is wrong to become wealthy at the hands of the poor. Proverbs 13:23 writes, "A poor man's field may produce abundant food, but injustice sweeps it away." This verse most simply means that if a poor individual is able to provide for himself and family, a wealthy individual will come along and benefit from the poor man's work because of his power leaving the poor man with nothing. God commands us to never take advantage of the poor, but instead give abundantly to the poor. Some people carefully consider how companies profit and whether they take advantage of the poor or act socially responsible before they make investment decisions.
The rest: Proverbs 16:8, 14:31, 22:16
Principle #7: Business Ethics
There a number of key ethical issues relating to personal finance and business that the Proverbs highlight. In Proverbs 3:27-28 we are to not with hold good from our neighbor when we have the ability to honor our neighbor's request. This touches on the idea of moral hazard, or choosing to abuse the integrity of a transaction made between two people in order to gain. This usually takes the form of not repaying a loan and having no intent to repay the loan even before the transaction takes place. Another key issue proverbs touches on multiple times is the act of entering into bribes. "A greedy man brings trouble to his family, but he who hates bribes will live." - Proverbs 15:27 A bribe is the act of persuading someone usually with money to act in an illegal or dishonest manner. Solomon commands us to steer clear of bribes because not only are they illegal, but they also create a greedy heart.
Some other ethical issues discussed in Proverbs:
Fraud: Proverbs 20:17
Dishonesty: Proverbs 25:13, 10:9, 11:1, 16:11, 20:10,
Get Rich Quick Schemes: Proverbs 28:20
Interest Rates: Proverbs 28:8