Category: Lifestyle

The Impact of Your Lifestyle

The Impact of Your Lifestyle

There are so many places that our money can be directed so it is important to set our priorities. One priority already set for the majority is tax, since the income tax act requires that taxes are deducted at source before we receive our pay. The more one makes, the more gets deducted.

One of the more challenging areas is our lifestyle because we always seem to want a larger lifestyle. We like to have a newer car, the latest cell phone, another toy and the list goes on. For this reason, limiting our lifestyle spending is never easy.

It has been said that lifestyle spending accounts for 40-70% of where our money goes. Please note that lifestyle spending is different than “living expenses” because lifestyle is about what we want, not just what we need to live.

Have you ever calculated how much of your monthly expenditures is directed toward lifestyle and these other areas? There is a simple tool in the form of a pie chart that I have used to determine the percentage of money that goes to each piece of the pie.

Taken from the Kingdom Advisors Educational Program

Your tax return can provide some of this data: start with your gross income, then subtract the tax you pay, then take off the amount you save (if it’s in your RRSP, you can find this on your tax return) and subtract your charitable giving (also on your tax return if given to a registered charity). Finally, subtract what you pay annually in debt (which typically is an extension of your lifestyle). What remains is your lifestyle. (Income – tax – debt – saving – giving = lifestyle).

In the Kingdom Advisors Study Group this month, Founding Director, Ron Blue shares the story of a couple who desired to give more than 10%. Might that be a goal for you?

This couple was spending 52% on lifestyle and 15% was going to pay on the debt. The reason for the debt was paying off things like an RV, motorcycles, boats – the toys or the extras. The toys are great to have but maybe not used as much as when first purchased.

This couple made the decision to sell the toys (for what they were worth – less than the purchase price) and eliminate the debt. They allocated this 15% to their giving, so they now gave 25%! This in turn reduced their taxes by 10% – that’s a definite win! This 10% allowed them to boost their savings and even add to their lifestyle boosting it to 59%.

Just think about that result for a minute: paying 10% less in tax, saving 3% more, giving 15% more and spending 7% more on lifestyle; who can argue with that? Most importantly, this couple was more content than they were previously. It came by eliminating the debt.

As a couple, we have calculated this in the past few years and have found it extremely useful, because like this couple, we were not 100% content and wanted to make some adjustments in our pie chart. In particular: decrease (or eliminate) debt, give more and pay less in tax.

How about you? If you would like to calculate your own, you can download the tool here: https://ronblueinstitute.com/tools/#budgeting_tools

Revisit your own pie and priorities on an annual basis. Maybe some adjustment might be exactly what you need!

Black Friday, Cyber Monday, Giving Tuesday

Black Friday, Cyber Monday, Giving Tuesday

Following the US Thanksgiving holiday on Thursday comes “Black Friday” where consumers shop for great deals which is a great lead-up to the frantic shopping Christmas season. I’m sure you have received and have maybe even taken advantage of some of these deals.

The shopping frenzy typically goes through the weekend and even extends into “Cyber Monday” – more deals.

In response to all this spending comes “Giving Tuesday” which highlights the importance of not just spending our resources on ourselves or the people we love, but also on giving to those we may or may not even know.

We have to set our priorities because all of these uses for our money are calling to us everyday! Honestly, I wish “Giving Tuesday” was a week earlier, before the big sales weekend.

The sequence of these days speaks to what is priority for most. There are typically only five places that money is directed:

  1. Lifestyle – typically the top priority / when we get a raise or bonus we tend to increase our standard of living.
  2. Owe – when we are not able to pay immediately for large purchases (house or vehicle), we often borrow for it, so in essence, debt is an extension of our lifestyle.
  3. Owe – let’s not forget what else we owe – tax. Amounts for tax are deducted from our pay so the taxman makes tax our top priority since this deduction happens as we receive our pay.
  4. Grow – “Pay yourself first” is a tag line used by many financial advisors to motivate you to save for your financial future.
  5. Give – sadly, giving is often the lowest on the priority list.

Maybe it’s time we adjust our financial priorities: instead of focusing on our lifestyle first and giving out of what’s left, maybe we should adjust our priorities:

  1. Give – Let this become our top priority / When we get a raise or bonus let’s increase our standard of giving (instead of our standard of living).
  2. Owe – The bank and CRA sets this as a high priority for us anyway.
  3. Grow – The wise save for the future while the fool spends whatever is received.
  4. Live – Our lifestyle can be based on what remains which will mean some adjusting.
Rev. Billy Graham

When we set the right priorities, our spending habits and our attitude toward money will change. Billy Graham believed that our thinking toward money has a profound impact on the areas of our life.

I didn’t realize Billy Graham shared so much wisdom about how to use money:

“God has given us two hands, one to receive with and the other to give with.”

We would do well to “remember the words of the Lord Jesus, how He himself said, ‘It is more blessed to give than to receive.’” (Acts 20:35 ESV).

During this weekend, remember your priorities! Will you give on Tuesday based on what’s left after Black Friday and Cyber Monday? Or is Giving Tuesday more of a priority?

Generosity and a Clogged Pipe

Generosity and a Clogged Pipe

Last weekend was a little frustrating at our house since the kitchen sink would not drain. My first instinct was there must be something clogging the pipes directly below the sink. I purchased a 15-foot long snake or auger that I could put into the 1 1/2 inch line. I was feeling confident that this would solve the issue. After using the auger, we ran the water and there was absolutely no change; the sink still did not drain. I plunged the sink several times but with no success. With the pipe being more than 25 feet long,  I reluctantly decided to cut the line, use the 15-foot auger in either direction which would, no doubt, reach the blockage. A joiner could be used to reconnect the line.

I knew this was going to be messy! I cleared the area, put down plastic and had a few buckets on hand. I began the cut knowing the line was filled with water that was bound to spill from where I was cutting. I’m sure a plumber would have been able to do this more efficiently but I was determined to solve this problem myself.  As I cut the line, the water began to squirt out and as the cut went deeper the smell and food particles coming out was absolutely gross.

Sure enough, as I put the auger into the line, I could feel the resistance; the line was clogged right at the very end. The line had a very gradual slope over the last 14 feet which would easily cause debris to build up. Time to rejoin the line and hope for the best! Run the water; how could this be? It still was not draining! After a few plunges and to my great relief, the line opened up and the water began to flow freely.  What a satisfying sense of accomplishment.

That got me to thinking about the purpose of that pipe; it was to have the water from the sink drain flow through it. The clogged line defeated the purpose of the pipe! We are all meant to be like a pipe or conduit where things flow through. In other words, what comes to us like gifts and talents, wealth and resources are meant to flow through rather than be stored up. The more we hold things and keep them for ourselves, the more there is an opportunity to have our pipes become clogged. Just this week, there was a financial need that we became aware of and I thought about that pipe; we could choose to keep the money in our account or we could help someone else by giving.

Think about the Dead Sea and compare it to the Sea of Galilee (which is just North of the Dead Sea).

Both the Sea of Galilee and the Dead Sea receive their water from the river Jordan. And yet, they are very, very different. Unlike the Dead Sea, the Sea of Galilee is pretty, resplendent with rich, colourful marine life. There are lots of plants.  And fish too. In fact, the sea of Galilee is home to over twenty different types of fish.

The river Jordan flows through the Sea of Galilee but the Dead Sea has no outlet!

The Dead Sea takes the same water from river Jordan as the Sea of Galilee; and just holds it. It does not give; and hence, there is no life there at all.

The moral… Life is not just about receiving. It is about receiving and giving.

Randy Alcorn in his book, Money Possessions & Eternity describes the purpose of the church this way:

Whereas the Old Testament temple was a storehouse, the New Testament church was a clearinghouse, a conduit of gifts to help the needy and reach the lost.

It is so easy to focus only on ourselves and think that what comes into our hands is meant only for ourselves (for vacations, pleasure or retirement) and not for others. As I reflect on my clogged pipe, I do not want my life to become clogged where nothing is flowing through.

Money is a blessing, but it is also a burden when we’re given more than we need. Giving produced freedom 100 percent of the time – freedom to be a conduit of blessing to others.

Why did my pipe get clogged? I suspect because there is not a sufficient slope for that length of pipe and the water is not flowing as well as it should.  Compare that to money flowing to us, the question becomes, “How much is flowing through us?”

Canada Helps did a study of giving levels from 2006 to 2016 and determined that higher income earning families saw the sharpest declines in giving (in these 11 years).  It seems that the higher the income, the less the money flows through or there is more likely to be a clog in the line. Here’s what I found interesting from the study:

The lower income families that do make donations have increased the amount of their income spent on donations from 3.3% to 5.5% in the past 11 years. In the meantime, families making $250K or more has consistently given around 2% of their income over the past 11 years.

One of our goals is to increase the percentage of giving each year going forward. The reason, as I reflect on the clogged drain, is to avoid that clog from happening in our personal financial affairs. Author John Piper put it this way:

The issue is not how much a person makes. Big industry and big salaries are a fact of our times, and they are not necessarily evil. The evil is in being deceived into thinking that a $100,000 salary must be accompanied by a $100,000 lifestyle. God has made us to be conduits of his grace.

May I suggest that as your income increases, consider increasing your standard of giving instead of your standard of living.  As Randy Alcorn so aptly put it,  “Giving is the safety valve that releases the excess pressure of wealth.” Are you releasing the build-up that wealth brings?

If Money Talks, What’s it Saying?

If Money Talks, What’s it Saying?

If you have money it can be used to get the things you desire and it seems the more money you have, the more you spend. I have often quoted this:

You make a living by what you get, you make a life by what you give.

Winston Churchill

So what are you most focused on: Making a living or making a life?

Deep within most Christians, there is a desire to please God, but we typically do not relate pleasing God with money? My initial thought about pleasing God is considering my behaviour, just doing what is good and saying what uplifts others. I desire to please God in every area of my life and especially with my use of money.

In a recent blog, I referenced the key to pleasing God being faith and the Bible makes this so plain: “Without faith it is impossible to please God.” Some might look at this and ask: What does that have to do with how I use money? A great question. Hebrews 11 is often referred to as the faith chapter, which reviews many of the faith heroes and how they invested their lives. They looked to something better, something invisible (requiring faith to see it), something eternal.

The first example given is Abel, who made an offering to God, which was acceptable because it involved faith on his part (see Hebrews 11:4). The point being that he gave first without knowing if there would be a second-born or a third-born. Compare this to his brother Cain; his offering was in the course of time and was rejected. The difference: Abel’s offering involved faith and Cain’s lacked faith and was rejected by God. It seems that Cain only gave when he saw the supply of his crops, or when he could afford to give (in the course of time). I am challenged when I think about this because it causes me to question my own financial priorities. Do I give in the course of time, when I have enough, or is giving a top priority?

One point that is easily overlooked is that Abel “still speaks through his faith.” In other words, his offering in faith is talking to us if we will listen. What, then, is being said? Could it possibly have anything to do with our use of money today?

Think about how you can use money:

  1. To Live – Probably the greatest priority and where the majority of a person’s or couple’s money goes is toward lifestyle. Often when a raise or bonus comes, an increase in lifestyle is the result!
  2. To Give – in my experience, I have found that giving is probably the last on the list of priorities, especially when a person is starting out, with so many other financial commitments.
  3. Owe (debt) – using debt to purchase a home or car is often a priority, which creates an obligation to repay. In a sense, debt is really an extension of lifestyle (when we don’t have enough money we borrow to get the things we desire). Maintaining a good credit score is important so on-time repayment becomes a definite priority.
  4. Owe (taxes) – Most have taxes withheld from their pay, so in that sense the government makes taxes the top priority.
  5. Grow – Saving money can be a challenge and people often consider a mortgage (debt) a forced savings plan, but saving little by little is one of the secrets to wealth.

Is it possible that Abel is “still speaking” about our priorities in this life and that in order please God, faith must be a priority in all our dealings, especially in our financial dealings? It is imperative that we set priorities around how we use money.

Here’s a question to consider: Are these priorities around money sequential or simultaneous? It would be nice to see them in a neat order of 1-5 and always keep the proper order, but the truth is these uses of money pull us in different directions daily, often shifting these priorities. We want to give more and save more but the amount we have to pay in tax and debt or just our chosen lifestyle hinders us from reaching these goals.

Please take a few moments to consider your financial priorities. Does your faith and pleasing God fit into your spending decisions? Could your financial priorities use some adjustments?