Tag: investing

Financial Principles to Practice

Financial Principles to Practice

Working in the financial industry for just short of a quarter of a century (why didn’t I stay just one more year?) and now having worked with Christian financial professionals for the past 10 years, I have come to this conclusion: Our personal finances should not be complicated – just follow five simple principles:

  1. Spend less than you earn
  2. Avoid the use of debt
  3. Build liquidity / margin
  4. Give Generously
  5. Set Long-term Goals

Here’s the problem – any of these principles are far too easy to violate. Statistically, at least 34% of working Canadians violate the first principle. Specifically, 27% spend everything they earn, and 7% spend more than they take in, according to a Financial Wellbeing Index from LifeWorks. This situation is particularly prevalent among parents, who are twice as likely to report spending beyond their income. Furthermore, 1 in 6 Canadians (17%) have monthly spending that exceeds their income, and 1 in 4 (27%) borrow to cover essential expenses like food and daily necessities.

If we spend more than we earn, it leads to the violation of the second principle where borrowing becomes the means of acquiring the necessities in life. The rise in credit card debt among working Canadians is also significant, increasing from 29% in 2021 to 42% in 2022. 

Here’s the reality – we are called to be stewards over everything placed in our hands. Is there one principle that trumps another? Or are each of these principles equal in importance?

For Christians, giving is a top priority, particularly when it comes to the teaching around the tithe (giving 10%). I’ve often said that giving is a way to invite God into our finances, but each of these principles is rooted in biblical wisdom, not just the principle of giving.

Here’s an example:

A faithful Christian couple is dedicated to Principle 4: Give Generously. However, they may have violated Principle 2 (Avoid the Use of Debt), when they borrowed to acquire rental properties. They borrowed when interest rates were low with a variable rate mortgage (not a fixed term); then the spike in interest rates has increased their payment beyond their rental income. This couple is now struggling financially and forced to violate Principle 1 (now spending more than they earn), with no ability to follow Principle 3: build liquidity.

How would you advise in this situation? Should they now suspend / pause their giving (at least for a time) to right their financial ship? What should they do to be better stewards.

What principle should be priority for this couple at this time? Is it”spend less than you earn” because it is the key provide the ability to abide by the other principles?

  1. Spending less than you earn will allow you to
  2. Avoid the use of debt and
  3. Build liquidity / margin and
  4. Give generously and
  5. Accomplish your long term goals.

Would you agree or disagree?

Proving Your Faith as a Financial Advisor

Proving Your Faith as a Financial Advisor

We all have aspirations in life that often mean we need to “prove” ourselves first. If you consider one’s experience to apply for a new position, we put together a resume to prove that we are qualified to do this job. Even more than that, we want to demonstrate that we are “the best” candidate to be hired for this role.

What exactly are we trying to prove? For financial advisors, many have set a goal to be the most trusted advisor – therefore attracting clients and business relationships to them. That seems to make sense but as a Christian professional, is this the best goal?

Since I read Matthew 3:8 a few weeks ago, I haven’t been able to get it out of my mind. John the Baptist, was preparing the way for Christ by giving this instruction:

“Prove by the way you live that you have repented of your sins and turned to God.”

John was really asking if they had any fruit in their lives that demonstrated that they were living a life surrendered to God.

In other words, is there proof in your practice that sets you apart or makes you unique from those who have no relationship with God? In your conversations, the way you use money, your business practices, your marriage and family relationships – all these should be positively impacted because you have “turned to God.”

John’s message and also that of Jesus, called people toward repentance – a change in thinking. When we change the way we think, the result is we change our behaviour – what we do. Here’s the big question: Is there proof in your life and your work that you have “turned to God?”

My question to Christian advisors many times is this: Is there any difference in your advice to clients because you are a Christian? Here’s how one advisor responded:

After going through the CKA material this past year and spending time with my cohort, I have learned a lot. The CKA® training and shared learning experience with my cohort has changed my perspective on my role in the financial business. I have been encouraged to practice these Biblical principles in my personal life and incorporate them into my business. 

When meeting with clients during their last review, I decided to add to the agenda a discussion about their legacy planning & giving goals.  I wasn’t sure how the clients would respond as this was out of my typical market based conversation (and personal comfort zone). Thankfully, the clients very much resonated with the agenda item and the questions I asked about their giving goals. We had a truly life giving conversation about their ministry passions, future opportunities to give, and how we can help them achieve these more personal goals. I believe the clients went from concerns about short term market trends (which are out of our control anyway) to a place of gratitude about how God has blessed them and excited about how God could use them (and their resources) to bless others. I hope and pray I can have more review meetings like this!   

For advisors in the cohort it has meant weekly meetings over five months with many hours of study to be prepared for the discussion times together. The result in the advisors words:

  • 1) a changed perspective on my role in the financial business
  • 2) life giving conversation(s) with clients
  • I added the “s” – I’m confident more life giving conversations will follow because of the changed perspective.

Therefore let your lives prove your change of heart

Weymouth New Testament Matthew 3:8