For anyone who is interested in being a better steward of what God has given them, I’ll share that I’m on the journey with you. My wife and I have been learning, failing, trying again and re-learning about money for most of our 5 year marriage together.
So if you are looking for in depth teaching about money, this post isn’t for you. But, I have prepared a presentation about money and am ready to look over what the scripture says if you are ready to learn about debt, investing, giving, etc. Click here.
The purpose of this post is to offer a few “quick tips” which I believe to be wise and within biblical guidelines (read: allowable for Chrsitians). As with all areas of life, it would not be wise for you to violate your conscience so seek wise counsel before jumping into something new. Not every example I use below will apply to you or your financial situation.
With that said, here’s the list.
1. Take advantage of tax deductions for charitable giving.
I know. I’ve heard the arguments. If you are donating money in order to get something, that isn’t the right kind of giving. I agree with that. If you only support ministries/churches/charities which allow you to take a tax deduction, I’d probably disagree with that if the tax deduction is the reason.
But let’s take a look at what a tax deduction is. The US Federal government taxes me based on my gross income. What that means is that my wife and I pay, for example, 15% of our AGI (adjusted gross income). So if I make $60,000 in a year, I would pay
60,000 x .15 = $9,000 in federal taxes for the tax year.
I get 51,000, the Feds get 9,000. But after I gave my church $6,000, I actually only had 45,000 to spend that year.
Now, let’s say I gave my church an even $6,000 in donations for that calendar year. The federal government allows me to deduct that amount from my taxable income. If I claim the deduction, my taxes look like this:
60,000 – 6,000 = 54,000 x .15 = $8,100 in federal taxes for the tax year.
So I end up with 45,900 in my pocket, my church still got the same amount of money though!
In this case, by simply changing a number on my tax return, I legally save $900 in taxes paid, a benefit my government allows.
Now, you are free to continue to send that $900 to the government. It is your right. But I actually believe I can find a better use for that $900 which is legally mine. Now consider this. Let’s say I sent that $900 to a few ministries. For example, I feel so bad about “profiting” from the entire exercise, so I sent $300 to an open air preacher in Southern California, another $300 to a church plant in New York and then give $300 to some Christian friends who use the money for tracts.
But let’s say $600 of that money is now tax deductible. So I have a new calculation:
54,000 – 600 = 53,400 x .15 = $8,010 in federal taxes for the tax year.
Uh oh! Now I have another 90 dollars to use. But where’s the uh oh? Where is the guilt? I have $90 more dollars, supplied by God through legitimate means to use for the kingdom, to bless those in need or to use for my family. There is nothing wrong with that. In fact, I would argue that doing what I showed above is, in fact, a more wise use of God’s money than sending it to the federal government. Let’s assume for now I give that 90 dollars to the evangelist at my church by buying him $90 in tracts.
Note, in each case the end result was the same for me. I had my salary, minus some money. What happens when I use the deduction is that I have more money to use for the purposes God has placed on my heart…which do not always agree with my government’s ideas. If you feel really terrible about having more money in your pocket, calculate your taxes with and without the deductions claimed, then give the difference away.
In fact, this is very much what we do. My wife and I are able to give at least 15% more because of our use of this benefit. And I hope that those to whom I give are wise in this way as well!
2. Use credit wisely if at all.
Most Christians understand that debt is not our goal. Eliminating debt is, frankly, a prerequisite for this post. But I’ve learned that not all debt is bad debt if understood properly and managed well. Consider this real case.
My wife and I learned to budget our money using the YNAB software. Click here to try it for free. It is worth every penny and you get a discount if you click that link! But really, get the free trial first and see for yourself. Moving on, what I liked about this software is how it consolidated all my accounts so that each transaction I make feeds the same budget. I had an idea. After not having a credit card since 2005, I decided to get a credit card. Here’s the key: the credit card must have a grace period. This is the period of time that the card allows you to have a balance and not be charged interest.
So, I got a credit card a few months ago with the intention that I would make any purchase I could on the card. In the process the following benefits ensue:
1. My savings balance is always higher. Last month my wife and I earned 5 dollar more in interest in our interest bearing accounts than average. That’s $60/year I can use for other purposes.
2. I got a rewards card for things like gas and groceries which we buy anyway. If my calculations are correct, I am expecting a few hundred dollars a year in rewards. I opted for cash rewards instead of “points.”
Added 01/19/2015 – I got my cash rewards this week. The total was $420. All for paying with a different card!
3. Like it or not, if I end up with a crazy unexpected expense, I do have a line of credit available now. But our intention is not to use it except for purchases which are backed by cash in our checking or savings.
Long story short, by getting a credit card, only making purchases which I could make with my budgeted cash anyway, and moving money around wisely I am expected to have about $400 more dollars this year than I would have otherwise.
3. Find coupons, look for discounts and promotions.
I can’t even begin to explain how much money I’ve saved just putting in some effort to looking for discounts. I joined freecycle.org where I’ve gotten a lot of free items I’d have never been able to purchase (and I’ve helped others, too).
— added 01/19/15 I don’t use freecycle anymore.
I used my Verizon Smart Rewards points to buy gift cards to a restaurant we go to anyway and saved 40%. The list goes on and on. I have a few websites bookmarked where I check for online deals. Last week, I was looking at stovetops and ranges around 950-1300 dollars at Lowe’s. I ended up buying an out of the box scratch and dent model for $450 which retailed new for $950. Guess what? It works just fine and you can’t see the dent. It would have been over $500 but I politely asked for a 10% additional discount in the store and it was granted to me (after some persistence).
I had part of my tax refund given to me in the form of an Amazon gift card this year and received an instant 10% return on my money. That’s unreal. As long as I make wise purchases I would have bought anyway on Amazon, I’m the winner!
Let me know if you have any good ideas or want some help understanding these things. A lot of it is just being willing to do math and be patient waiting for something you want.
I like your post, Michael. I struggle with budgeting, so I’m going to try the software you and Erin use.
I’m so glad. I can’t tell you how much it has helped us. One of the best ways is that is was a common thing that both of us can use and understand, so it got us on the same page as a couple. Be sure to use the link in the post, please, I get a tiny commission 🙂
I’ve been watching videos and signed up for the 9-day course. It looks good, and if we decide to go with YNAB I’ll definitely go through your blog!
That’s great. We can definitely say it has been very helpful!
I finally downloaded the free trial version of YNAB last night and have been working with it since. It seems like it will be very helpful to us. It’s definitely a different way of thinking about money and budgeting.
When I decide to go ahead and buy the software, do I need to go back to the link on your blog for you to get credit for my purchase?