financial independence Archives

Financial Independence and Eternal Salvation – Is There a Connection?

In so many ways, a blog that deals with personal finance from a Christian perspective is a perfect marriage. Successfully managing personal finance is largely about adopting a life based on delayed gratification. Christianity meanwhile, teaches us to move steadily closer to God through Jesus Christ throughout our lives, and to rely completely upon Him, which ultimately will result in eternal salvation.

There seems to be a connection then between pursuing financial independence and attaining eternal salvation. If this seems like a stretch, consider some of the following points.

The Gospel Does Not Promise Us Paradise This Side Of Heaven

When you first become a believer in Jesus Christ your worldly troubles don’t magically disappear. You will not yet enter the Kingdom of Heaven, nor will you be sinless or made perfect. Quite the opposite! It is usually the beginning of a process that is sometimes referred to as patient endurance.

The Apostle Paul spells this point out clearly:

Not that I have already obtained all this, or have already arrived at my goal, but I press on to take hold of that for which Christ Jesus took hold of me.” – Philippians 3:12

In fact, in 2 Timothy 4:7, he likens the Christian’s life to a race:

“I have fought the good fight, I have finished the race, I have kept the faith” (2 Tim. 4:7)

If you have ever run in a race, you know that there are times when you will be making incredible progress – and other times when you seem to be getting nowhere. There may even be times along the way when you will stumble and fall, and need to collect your wits before going forward. But your overriding objective is always to focus on the goal.

Our job as Christians is to press on toward the goal of salvation in the midst of living an imperfect life in an imperfect world. But always we have to have faith in the outcome, that we’ll have eternal life with our Savior in Heaven.

Financial Independence Comes From Doing Without Today For A Better Tomorrow

One of the reasons why so many people never achieve any level of financial independence is because they are consumed by the issues of the moment. There are bills to pay, things to buy, and fires that need to be put out. They can soak up all of our time, energy and money. The problem with that arrangement is that we never move forward toward the independence we hope to achieve.

But in order to have that independence, we have to become more future oriented – we have to let go of some preferences and habits today, in order to pave the way for a better future. If we are never able to grasp that concept – and to put it into action – the likelihood is that tomorrow will look just like today.

Both the “race” for financial independence and eternal salvation involve a large dose of delayed gratification, to always be focused on the goal at the end, rather than the troubles and desires of the moment.

The Key To Attaining Both: Letting Go Of What Tempts Us

Whether it is eternal salvation or financial independence, temptations always have us surrounded. On the financial side, we will always have unlimited wants. We want a bigger house, a better car, and yet another vacation. But unless we are willing to let go of those forms of instant gratification, our financial futures may not get any brighter.

The same is true with eternal salvation. We have to let go of much of what it is that ties us to the world. The world may put a premium on chasing money, power, popularity and even fame. But if we hope to obtain eternal salvation, we need to be ready to let go of earthly pursuits. Accepting Jesus as our Lord and Savior is the key to our salvation, but our willingness to let go of everything else is proof that we are His.

Both financial independence and eternal salvation call us to delayed gratification. It’s about sacrificing today for a better tomorrow – and believing in our mission along way.

Am I saying that the pursuit of financial independence might – or even should – be easier for Christians? Maybe, maybe not. But the direction is the same with both, which should be a major clue.

Can you see a connection between eternal salvation and achieving financial independence?

photo credit: skambalu

An Emergency Fund: The First Step to Financial Independence

By Kevin M

When we think of financial independence we often think about having a lot of money, of having a fully loaded retirement plan, a house that’s paid for and being able to spend money any way we want.

That may be financial independence on the high end, but you’ll never get there without taking a few less glamorous steps beforehand. One of those steps is creating an emergency savings fund. It will be the foundation of everything that comes afterwards.

Why An Emergency Savings Fund

You May Not Be Ready For Stocks, Bonds And ETFs – Yet

Talk about financial independence often focuses on investments. Where’s the market going? What are the hottest stocks? What winning ETF will get me to my investment goals? How much do I need to save for retirement?

That’s all good, but if you don’t have any of those activities going right now, you need to back up and do something more basic. You need an emergency savings fund. As boring as it sounds, an emergency fund does several things that will start you on the road to financial independence:

It gets you a basic savings balance
It proves that you can save money, which is critically important if you never have before
It provides a measure of insulation between you and financial desperation
It lays the foundation for greater savings—and investments—later
When you have investments, an emergency fund will keep you from having to liquidate those investments to pay current expenses or emergency situations

I think it’s safe to say that until you get the items above going, financial independence will never be much more than a dream.

Starting Off On The Wrong Foot

Financial resources have three main components in most households: income, savings and credit. Each of these can be used to pay obligations, but they aren’t all equally up to the task.

1. Income. This is the preferred resource to pay obligations, especially current ones. When your income meets your current obligations your household budget is under control and you’re ready to move on to better things.

2. Savings. In a perfect world, savings should be available to back up your income in the event that it isn’t enough to cover your immediate expenses. You’re in a good place if that doesn’t happen too frequently, but it’s there if you need it.

3. Credit. Credit should be used only for the purchase of major assets that will provide you with benefits for a long period of time. It’s a way to spread the expense of high cost items over a longer time frame. Houses, cars and a college education are the best examples, and even then only if they aren’t taken too far. Credit can also serve a secondary role as the back-up to your savings, in the event they won’t cover a large run of expenses.

Income and savings are the preferred financial resources, with credit as a need-to-use-only resource. The problem is that for many people, it’s not savings that backs up their income, but credit. This comes about because while savings take time, effort and sacrifice, credit comes about with the swipe of a card.

The need to save money is skipped entirely. That’s bad because having savings, and at least an emergency fund, has fantastic advantages…

An Emergency Savings Fund = ”Sleeping Money”

Have you ever lost some sleep, or even an entire night’s worth, worrying about paying your bills? More specifically, this is likely to happen when you really can’t pay your bills. This is what happens when your budget is stretched too tight, when there aren’t enough resources to meet obligations.

If nothing else, having just a few thousand dollars sitting in a savings account might bring you the blessed sleep that you need to live your life.

Debt Can’t Go Away Until You Stop Using It

An abundance of debt is usually accompanied by an absence of savings. Is there a connection? I think so.

When you have no savings, you’re forced to rely on credit to cover those income shortfalls. And when you’re constantly tapping your credit lines, you’re going deeper into debt.

Most people who are in debt would do just about anything to get out, but that can’t happen until you stop using credit. The only way to do that is to live on less than you make and be prepared to cover emergencies with your savings—a true emergency fund.

Being Ready For Trouble

When you have savings—at least an emergency fund—you’re ready for problems. It’s not that you want them to happen, but rather that you’re prepared if they do. Any trouble you face will be that much easier to deal with if you have a savings cushion to back you up. Savings give you options, and that can take the panic right out of a troubling event.

The more you have saved the more trouble you’re ready to deal with. But at a minimum, you should have an amount sufficient to cover predictable shortfalls, such as major car repairs, medical deductibles, or a job loss.

When you’re ready for these, life becomes more predictable, and that puts you in better control – it’s almost like having a self-funded insurance policy.

How To Get There

There are different ideas as to how much you should have in emergency fund, but I think the best is having at least an amount equal to 30 days of living expenses. If you have 30 days of expenses saved, you’ll have enough to cover the first month of a job loss, which will give your unemployment checks a chance to start showing up.

How do you reach that goal?

Start by selling anything you don’t need with a garage sale or on Craigslist, and banking the money.
Bank your bonus, your tax return or any gift money you receive.
Bank 10% of your net income for the next ten months, or use some other percentage strategy that will get you there. A temporary part-time job can help with this too.

Any difficulty you’ll encounter in building your emergency fund will be less than the trouble you’ll be getting out of by not having one. That’s the first step to financial independence. Everything else will flow from that.

Build Up Your Financial Security In Uncertain Times

By guest

[This post is written by Derek from Creating A Passive Income. His goal is to explore every single passive income source there is and evaluate their effectiveness and revenue. If you’re interested in extra income, be sure to check out his site.]

There is a common piece of advice going around between parents and students. “Go to school, find a safe, secure job with good benefits, and you’ll retire well.” Let me be the first to tell you, this advice is terrible.

In our world today, there are fewer jobs than there are people, and employee turnover is higher than ever before. If you make a mistake or if your salary exceeds what is typical for your position, you might very well be on the chopping block. You might have your college degree, but guess what, so does everyone else.

The Typical Response for Financial Security

Occasionally, things just don’t work out with employment. It might not even have been your fault. The decline of the economy, the struggling sales of your company, or a transfer of ownership could be the cause of your job displacement. Whatever the case may be, you should have a financial plan in place so that you’re protected against total bankruptcy.

Once again, there’s some common advice out there – “To protect yourself from financial devastation after a job loss, you must have an emergency fund with funds equivalent to 6 months worth of expenses.” While I do condone an emergency fund, this alone will not protect you against complete financial failure.

After all, what if you just can’t find a job until month number 8? What happens then? You load up the credit cards? I hope not. The problem with setting aside a static stash of cash is that it is not regenerative. If you keep pulling money out and no more money gets put in, it WILL run out!

photo credit: Stuart Miles

The Best From of Financial Security

In these economic times, one really has no sense of security in a typical job. I’ve seen it too many times – people proclaim that no one can do what they do and that they’re too valuable to get rid of. And then….they get the boot….

Rather than depend only on an emergency fund for that potential job loss, I suggest that you focus on two more aspects of financial security.

1) Live well below your means

2) Build a residual cash flow

Live Well Below Your Means

My wife and I both work and we make a point to live off only one of our incomes. That way, if one of us loses a job (it’s happened before), we’re still completely fine financially. Maybe you can’t bring your expenses down to half of what you’re used to, but make an effort to reduce them and you’ll feel much more secure in the event that a job is lost.

Build a Residual Cash Flow

Instead of having just one or two incomes, why not go for three or four? That way, if one of your jobs says “see-ya”, it won’t be that big of a deal. My wife and I both have full-time jobs, plus she does photography on the side and I earn quite a bit of money through various passive income ventures. Now this is a true set-up for financial security, wouldn’t you say?

Perhaps you’re strapped for time and cannot possibly start another venture. If this is the case, then at least have some potential income options written down. You don’t want to lose your job and have no possible income sources. This is how you deplete your emergency savings in record time and make friends with the repo men…

Have you set up an emergency fund in the event of a job loss? Have you done anything more?

article photo by cooldesign