New year good time to set clear financial goalscomment (0)
January 6, 2005
By Sondra Washington
The Christmas spending season is over and unfortunately many people may be reminded of their merriment well into the upcoming year if clear financial goals are not set for the future, experts contend.
Barry Bledsoe, president of The Baptist Foundation of Alabama, noted a shocking statistic that the average 40-year-old spends 120 percent of his or her income each year.
“Debt management is a problem for all Alabamians including the ones in our churches,” he said.
“It is a problem within our whole society. Debt management has to be brought under control before we can become good stewards,” Bledsoe noted.
As Christians, good stewardship is a biblical requirement, according to Bledsoe. “Biblical stewardship is handling everything we own including our time, talent, income and assets in a way that is pleasing to the Lord after we seek His guidance,” he said. “That should be the umbrella under which we operate.”
Bledsoe used the parable of the talents as an example of the importance of good stewardship with our belongings. “We are going to be judged on how we have used what we have been given,” he noted. “I don’t want to be like the one who buried that coin and gave it back. That wasn’t pleasing to the Master.”
Without good financial goals, people have no way of knowing if they are working in the right direction or against themselves, said Dale Henderson, a financial planner for First Financial Group of the South in Auburn.
“Everybody needs some form of financial goals to work toward in an effort to accomplish some financial objectives whether it is planning for your children’s college, retirement or how much you give your church,” Henderson said.
“There are all kinds of ways to achieve your goals. It’s just a matter of deciding what is important to you and making up in your mind to accomplish it.”
Bledsoe and Henderson offered the following tips for setting financial goals:
• Determine your spending habits.
“You have got to find out where your money is going each month in order to change your habits,” said Henderson. “You can’t start saving unless you find out how much money you have to save.”
“Determine how much do you want to give to your church on a regular basis,” said Henderson. “The Bible says 10 percent but a lot of people want to give more.”
• Get consumer debt under control.
“Consumer debt would be debt other than a house or car,” said Bledsoe. “That is the kind of debt that really becomes a burden.”
Henderson added that consumers should seek to get out of debt. “If you are in debt, work toward a strategy to eliminate that aspect of your financial plan,” he said.
• Pay off debt from Christmas and prepare for next year’s holidays.
“A good goal would be to begin saving in January for next Christmas, so that you can pay cash for your Christmas,” said Bledsoe. “Set as a goal to not borrow money for Christmas. A lot of banks have Christmas club accounts to help discipline you to set money aside for that purpose.”
• Accumulate an emergency fund of three to six months’ income. Henderson noted that this goal may take longer for some depending on their financial situation.
“Set aside $5 to $50 a week and don’t touch it,” he said. “Take your lunch to work rather than buying lunch. It adds up.”
Bledsoe added that it takes discipline to save.
“An old farmer gave the best advice I’ve ever heard — it’s not how much you make it’s how much you spend,” he said.
“You have to live on less than you earn instead of more.”
• Develop an estate plan.
“Ninety-one percent of the average American’s net worth is non-income non-cash assets,” Bledsoe said.
“Most of the gifts to the local church come from income and cash assets or 9 percent of that person’s net worth. [Some have] never paid attention to being good stewards of estate assets.”
To help Alabama Baptists manage all of their assets after they are deceased, The Baptist Foundation of Alabama is beginning a biblically-based debt management and estate planning program.
“Most church members understand being stewards of time and talent and income, but they have never applied that to their main assets which is their estates,” said Bledsoe. “A good biblical steward should be able to do all of these things.”
• Develop a budget.
“A budget is a plan to spend money,” said Henderson. “If you have a goal then a budget is a tool to help you reach that goal. It’s not a restrictive strategy to keep you from having fun; it is a positive strategy to help you reach your goal,” he said.
• Consult a financial planner.
“If you desire to better yourself, a financial planner can help you accomplish your goals in a more timely manner,” Henderson said.