In this article Olusegun Omoniwa gives us six principles to financial wellbeing and surplus that we can apply in our personal finances to become better managers of God’s resources and be in a position to effectively advance the Kingdom.
“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.” Luke 16:13 NIV
There is a financial perspective to advancing the Kingdom, financial lack and want can pose a hindrance or limitation to giving God our best. Hence, as stewards of God’s resources we need to understand how to manage the financial resources God gives us with the view to ensuring that we channel them towards advancement of the Kingdom.
The concept of financial well-being is not defined in a neat small box as it could mean different things to different people. These definitions are drawn from our unique life experiences, socio-economic circumstances, age, gender, level of education and social expectations to mention a few. One universal foundational concept for financial wellbeing is spending within your means and saving to build financial security for when you can no longer work. This can be neatly coupled with being able to meet all your financial obligations and needs comfortably even when one of your primary sources of income fails. The key measure which facilitates financial well-being in both cases here is “Surplus”.
One universal foundational concept for financial wellbeing is spending within your means and saving to build financial security for when you can no longer work
There are two ways to create surplus which can lead to financial wellbeing. There is the bottom up and top down approach. In the bottom up approach, you gradually peel away the excesses and create room within your current earning potential to build future financial security. The top down approach involves building additional streams of income. These income streams could be passive or active depending on the level of involvement or management time it requires from you. Most of the strategies we advocate within wealth management are passive with the added benefit of securing professional advice and management. Here are some common principles which can support your financial success.
Principle 1: Avoid making impulsive financial decisions
In one study, researchers offered several groups of people the choice of some money now, or a larger sum in a few weeks. The choices were illustrated with pictures. The only group who failed to make the wiser choice of a future payment were men shown pictures of extremely attractive women alongside the option of an immediate payment. This choice was clearly driven by an emotional reaction leading to an impulsive decision. Being highly stressed can also lead to impulsive or irrational financial decisions. In these situations, the age-old advice of “sleeping on it” makes a lot of sense.
Principle 2: Remain steadfast
In providing financial advice I constantly advocate the habits of successful investors. At least three of these habits have to do with being consistent, staying the course and remaining calm especially when every indication tells you to make an emotional decision about an uncertain future. A study was done a few years ago by a Fund Manager to determine which of their thousands of clients usually achieved the best performance returns after adjusting for risk. It was found that best returns were often from clients who had either forgotten about their accounts or had passed away. So avoid looking at your investment portfolio too much. If your time frame is 10 or 15 years, why worry about what is happening this month or this year? Many of us with long term pension accounts can relate to this principle.
Principle 3: You can always say “NO”
Whether this is to that extra night out every month, that additional feature on the car no one but you and three other people in your home town would notice or the additional channels on the premium bouquet you would probably only watch once. Anything that would cause you to spend more than is necessary will not help your pursuit of surplus in the long run.
Anything that would cause you to spend more than is necessary will not help your pursuit of surplus in the long run
Principle 4: All money is equal
Research in behavioural psychology shows we tend to treat money differently depending on where it came from. So for example we are more likely to spend a discount or cash gift differently from how we spend a bonus. Adopt the habit of treating all your inflows, whether salary and pension increases, cash gifts, bonuses the same as core income. That means directing it to the same spending priorities, including saving for your future self or reducing debt, as core income.
Principle 5: Do not get drawn in by those faking it to make it
Too much exposure to reality TV, selective reality and lifestyle on social media has been found to increase people’s sense of inadequacy and insecurity. An attempt to conform to the unrealistic physical looks and accoutrements on display can lead to impulse and emotional spending to fill a false void. Have a solid grounding in your priorities and goals so you do not get swayed by carefully curated life portrayed in the media. In Matthew 6:19 Jesus tells us not to store up treasures here on earth where they do not have any lasting value but to be eternity focused in how we direct our spending to show where our heart truly is. This is relevant even in this age.
An attempt to conform to the unrealistic physical looks and accoutrements on display can lead to impulse and emotional spending to fill a false void
Principle 6: Replace a bad habit with a good one
There are 5 habits of successful investors as listed below:
- Invest for the long term
- Use market corrections (decline in price of a security) as an opportunity
- Avoid stop-and-start investing
- Diversify, diversify, diversify
- Don’t be swayed by short-term sentiment
You should replace any bad habits you currently have with good ones. Your current money habits are affecting your financial wellbeing. You alone hold the key to changing these habits, creating “surplus” and making an uncertain future a little bit more certain one day at a time.
Finally, having surplus allows you to truly serve God the way He wants you to. In Luke 16:13, Jesus tells us that you cannot serve God and Money. If you are in constant debt and unable to create financial surplus, you will be serving the lender of the money you owe and cannot be free to truly serve God the way you should with your best. Think about it for a second. If you are in debt, you may not be able to tithe, give generously, provide for your family, follow God’s leading to move out of a city, job and sow seeds as directed by God. How you manage your money matters to God because the bottom line of your bank account may keep you from being able to say “YES” to what He is calling you to do.
Olusegun Omoniwa is the Head of Wealth Management at Standard Chartered Bank Zambia Plc. Through its Financial Markets teams and in partnership with asset management firms and insurance companies, the Wealth Management team provides a range of products and solutions to help clients grow and protect their wealth. Their clients span the full spectrum, from individuals to small business and corporate clients. They have teams of Investments Advisors, Insurance Specialists and Treasury Specialists who interact with clients, and Relationship Managers who provide expert insights on local/global markets and specialist advice.
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