The Grad's Guide to Money: Simple Tips to Saving, Giving, and Smart Spending

By The Navigators

Facing real-world expenses on a Ramen-noodle budget is tough for anyone, but if you’re just starting out, it can feel overwhelming. Before you can develop what will be your personal approach to finances, you need to know what God’s purpose is for the money he has entrusted to you.

The Grad’s Guide to Money explains how to have real-world and spiritual financial habits that align with God’s will. Find out:

• Why you need to stay on top of your student loans
• What’s so important about a good credit score
• How to avoid debt
• Where in the Bible you can find God’s direction on money
• How to budget, spend, give, and save wisely

• Language: English
• Publisher: Tyndale House Publishers
• Release date: Feb 27, 2014
• ISBN: 9781612914565

Book preview

1

Your Future Is Amazingly Bright

I know the plans I have for you, declares the LORD, plans to prosper you and not to harm you, plans to give you hope and a future.

JEREMIAH 29:11

I’m doing all right, getting good grades. The future’s so bright, I gotta wear shades.

TIMBUK3

You are very unusual. Did you know that?

It’s highly unusual — some might even say odd — for a person your age to pick up a book about money. Even odder to actually read one.

But here’s the really cool thing about your strange behavior. If you continue reading this book and actually put its ideas into practice, you are very likely to become oddly successful.

I make that claim with complete confidence because the principles in this book are not principles I made up. They are all drawn from the timeless truths of God’s Word.

He cares so much about how you and I use money that he filled his Word with more counsel on money than on any other topic other than the kingdom of heaven.

You Have Huge Financial Potential

Over the course of your lifetime, you will likely handle several million dollars. That might seem impossible to believe since you probably don’t have much money right now, but it’s true that you have every possibility of earning and accumulating several million dollars.

Just flash-forward a few years. Imagine that you’ve graduated from college and have started working at a job for a very realistic $30,000 per year. Of course, you’ll work hard, so now imagine that your hard work is rewarded with at least a 3 percent raise each year. By the time you’re sixty-five years old, you will have earned almost $2.7 million!

Of course you’re going to need to spend a lot of that money. You’ll need a place to live, a car, food, clothing, the occasional vacation, and all the rest.

But let’s say you make the really smart decision to live within your means — to spend less than you make. And now let’s say you’re super smart and choose to invest 10 percent of all the money you earn. By the time you’re sixty-five, assuming you earn an average of 7 percent interest each year on the money you invest, you would have an investment account worth over $1.8 million.

Wow. You’re a millionaire in the making!

Accumulating that much money in your lifetime won’t even be all that difficult. You won’t need a degree in finance, you won’t need to work on Wall Street, and you won’t need to win the lottery. You’ll just need to do a lot of little things right for a long period of time.

Yet very few people come anywhere close to accumulating that much money.

Missed Opportunities

Consider this:

•   Instead of the million dollars or more they realistically could have accumulated, half of all of today’s workers age fifty-five or older have less than $50,000 saved for their retirement.¹ When they were your age, they had all the time and opportunity that you have, but they made very little of either one. After working for more than thirty years, they have left themselves in a very vulnerable position. Many will have to keep working long after they would have wanted to slow down. Others will be dependent on their adult children to help them out.

•   Instead of adding happiness to people’s lives, money often gets in the way, adding stress and messing with many people’s most important relationships. Divorce attorneys say that financial issues are among the most common reasons couples split apart.

•   Unfortunately, many people don’t have to wait very long before they start feeling some financial pain. Many recent college grads say money problems (usually the high monthly cost of paying back student loans) have led them to follow a career path other than the one they studied for. Their debts forced them to choose a job that paid the most instead of pursuing what they were passionate about. Many other recent college grads say they’ve had to put off grad school, delay when they’d like to get married, and wait longer than they’d prefer to buy a house, all because of financial problems.²

Why is that? With so much financial potential, why do so few people barely even scratch the surface of their potential? And what can you do to fulfill yours?

A Different Path

To a great degree, the answer is that most people follow our culture’s teaching on money. They see what most people do with money, assume that’s the right approach, and blindly march along.

Achieving true financial success will require that you take a different approach. It’ll require that you live as you were intended to live, making decisions based on God’s wisdom.

God’s teaching on money can help everyone, but you are in an especially good stage of life to get more than most people from such teaching. That’s because you have something going for you that older people don’t have: time. God willing, you have many years ahead of you.

As will become clearer in chapter 10, when we talk about investing, time is one of the most important raw ingredients for financial success. If you do little things right over a long period of time — if you build the right habits — you will be unusually successful.

There are plenty of older people today who would give anything for the chance to reset the clock and make better use of their time and money. This book will teach you the practical daily money-related habits, along with the important habits of the heart, that will help you make the most of the time and money that have been entrusted to you.

More Than Money

Biblical teaching about money is certainly about using money effectively: building savings, avoiding what it describes as the bondage of debt, and such. But God is interested in much more than just your financial success.

In the world, success is its own destination. Not so in the Bible, which tells us that to whom much is given, much is expected.

Taking a biblical approach to money is about putting God’s principles into practice so that his purposes for your life and for the money he entrusts to you are fulfilled.

It’s about using money in a way that leaves you free to hear and respond to God’s call on your life, strengthens your most valuable relationships, enhances your relationship with God, and glorifies him.

It’s an unusual approach to money, both counterintuitive and countercultural. As you’ll see in the next chapter, I discovered God’s approach to money only after many years of foolishly following the world’s financial plan.

At the end of each chapter, you’ll find a verse of Scripture that I encourage you to memorize, a question or two for reflection or perhaps discussion with a friend, and a suggested action step. Throughout the book, you’ll also find several forms or suggested websites to help you act on what you’re learning. Combined, these features will help you establish the financial and spiritual habits that will last for years to come.

Memory Verse

I know the plans I have for you, declares the LORD, plans to prosper you and not to harm you, plans to give you hope and a future. (Jeremiah 29:11)

Reflection Questions

1.   What’s your reaction to the idea that you could very well end up earning and accumulating several million dollars in your lifetime? Is that exciting? Intimidating? Why?

2.   What are some ways you could use that money to glorify God?

Action Step

Ask two people at least twenty years older than you what they wish they had done differently financially when they were your age.

2

The Habits of Financial Wisdom

If anyone loves me, he will obey my teaching.

JOHN 14:23

We are what we repeatedly do. Excellence, then, is not an act but a habit.

ARISTOTLE

The media is filled with stories of overnight successes, but overnight success is a myth. In fact, writer Malcolm Gladwell has even quantified exactly what it takes to succeed in any field. In his book Outliers, he says that success — whether becoming a great grade-school teacher or an accomplished pianist — takes about ten thousand hours of practice.¹

When it comes to successful money management, something very similar is true. I don’t know that after ten thousand hours we’ll all have the money thing completely figured out, but it is absolutely true that financial success comes through the cultivation and daily, ongoing practice of certain habits — practical habits and habits of the heart.

Habits Beat Circumstances

What you do with money on a regular basis — how well you do your job, how much you save or invest, how well you research various purchases, and how you think about money — will either lead you to a successful experience with money or not.

The day-to-day money-management habits you’re building right now, at a time of life when you probably don’t have much money, are hugely important. That’s because once you do have some money, those habits will be magnified. And your circumstances matter a lot less than you may think.

No matter whether you scored high or low on your SAT or ACT, whether you major in education or nuclear physics, whether you become self-employed or work for someone else, whether your parents are rich or poor, whether you end up working outside or in an office, whether you live in a big city or a small town, whether you come from a white family, a black family, or a family of some other race, no matter what your circumstances, you have the potential to do extremely well financially.

I’m not saying your circumstances don’t matter at all. Sure, if your parents pay for all of your schooling, you may have an easier time getting ahead financially than someone who graduates with $100,000 of student loan debt. Maybe, but not always.

There are plenty of people who had what looked like great circumstantial advantages over others and ended up far worse off. By the same token, there are plenty of people who seemed to have all the cards stacked against them but went on to achieve remarkable success.

Habits are the great equalizer. A kid from a wealthy family who gets an MBA from a prestigious private school, spends a semester studying in France, and lands a high-paying job right out of school can easily fall into the habit of spending more than she makes.

A kid from a poor family who gets a degree in social work from a state school, never travels more than fifty miles from home on vacation, and starts out earning what most would agree is a meager salary can just as easily get in the habit of saving and investing a portion of all he makes.

Who will be more financially successful? I’m betting on the kid from the poor family.

In the chapters that follow, I’m going to introduce you to ten financial habits that will help you achieve financial success. Along the way, I’m going to challenge you regarding what you believe about money, because your belief system — habits of your heart and mind — will make all the difference in whether you actually put the more tangible financial habits into practice. And they hold the key to achieving not only financial success but meaningful financial success.

As I said earlier, the financial habits you start cultivating and practicing right now at your young age are hugely important because they will be magnified later