FUNDAMENTAL PRINCIPLES FOR ACHIEVING FINANCIAL WELL-BEING
Is financial well-being the same as wealth? Do all billionaires, for example, have financial well-being? Surprisingly, the answer is “not necessarily.” Most of us erroneously associate wealth with financial well-being. But while wealth is desirable, good stewardship can place financial well-being within the reach of both the poor and the rich.
There are some fundamental principles for achieving financial well-being of which most people are not aware. In this series, we are going to learn how to apply these principles of financial well-being to our own lives.
What Is Financial Well-being?
Financial well-being can be defined as a state “wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.”1 What is striking about this definition is that financial well-being is dependent on the individual’s perception and choices. While the ability to fully meet financial obligations can be objectively measured using the metrics that assess credit worthiness; the rest of the components of financial well-being are subjective. All things being equal, it is possible to have financial security and not achieve financial well-being. Ultimately, financial well-being is subjective and predicated on one’s feelings and definitions of enjoyment. Because of this, it is very important that we understand what influences our choices and enjoyment. While there are many different aspects to enjoyment of life, we can all agree that human beings can truly enjoy life only if they are achieving their perceived purpose.
Our worldview determines how we frame our purpose. The term “worldview” refers to the lens through which we see, understand, and experience the world around us. It can be influenced by several things, such as culture, education, religion, personal experiences, and so on. Understanding one’s worldview is key to developing self-awareness, which informs financial decisions.
The most predominant worldviews are based on religious tenets, such as Secularism, Islam, Hinduism, Syncretism, Christianity, and so forth. While these articles are written from a Christian worldview, it is important to note that for those individuals who are ethical, caring, hardworking, and conscientious, principles of financial well-being are universal, although they may differ in how they are applied. For example, the principles of giving back are universal. In the secular world, it may be called good citizenship; and for Christians, stewardship.
Let us now explore seven principles that are pivotal to
achieving financial well-being.
1. Knowledge Is Power
According to Peter Drucker, the late renowned business author, there is power in knowledge.2 In the Bible, God laments, “My people are destroyed for lack of knowledge” (Hos. 4:6, NKJV),3 and this is true in all areas of our lives. Though knowledge is power, the key to unlocking this power lies in how well it is applied. Wisdom, which is the judicious application of knowledge, is arguably the single most important key to achieving financial well-being.
2. Financial Well-being Matters
Financial well-being matters because it is intricately tied to other aspects of our well-being. From a Christian worldview, our Creator wants us to prosper in all things: physical, emotional, spiritual, and yes, financial. God wants to bless us and to enable us to live a life of abundance. Deuteronomy 8:18 states, “But thou shalt remember the LORD thy God: for it is He that giveth thee power to get wealth” (KJV).
3. Purpose Matters
Our worldview determines our understanding of our purpose. Since life is not an end to itself, everyone needs and can benefit from having a purpose that they strive to achieve. Most successful organizations have a mission statement. It is important that we as individuals also define our purpose and articulate our own mission statement. All things being equal, those living a mission-driven, purposeful life experience a greater state of financial well-being than individuals with significant wealth whose lifestyles are not aligned with their purpose.
4. Lifestyle Matters
The way we live our lives has a great bearing on our financial well-being. A poor lifestyle drains financial resources, promotes poor health, and fuels poor decisions that erode intellect. As in most things in life, there are universal laws for a good lifestyle. There are eight all-encompassing but simple laws relating to a healthful lifestyle: nutritional intake, exercise, water, sunshine, temperance, air, rest, and trust (NEWSTART).4 When we wisely apply these laws as the building blocks of our lifestyle and then put in place a budget aligned with these laws, we achieve greater financial well-being.
5. Money Matters
When it comes to “freedom to make choices” and meeting needs, money matters. Cash (ours, not borrowed) is king. Our needs change as we go through our individual lifecycles. Lifecycle refers to the phases of life from the cradle to the grave. It is extremely important that we all have money and plans that cover financial needs even beyond the grave.
6. Plan, Then Act
Yes, let’s take time to plan, especially if we do not have enough means. However, planning without action does not yield results. Acting without planning often results in failure. A good financial plan implemented wisely yields success.
7. Humanity Matters
To be human is to be connected to other humans, whether as families or as units of a larger society; and when we invest in our local and global communities and support each other, we enhance our own financial well-being. When our world and our community thrive, we all thrive. We should be generous with our financial resources.
Food for Thought: An example of Applying These Principles Using a Christian Worldview
All seven principles articulated above should be integrated into a personalized framework that is coherent, relevant, and practical. The trickiest part in doing this is to find answers to three questions: (1) What is knowledge? (2) How do we gain knowledge? and (3) How can we apply knowledge? Proverbs 9:10 unequivocally declares that “the fear of the LORD is the beginning of wisdom, and the knowledge of the Holy One is understanding” (NKJV). For those of us who concur with this declaration, we have a definition of knowledge, and insights on how to gain and apply knowledge. Knowledge is garnered from reading the Bible, which is regarded by many Christians as the final authority in all things. Furthermore, the Bible prescribes how to assess the attainment of the most subjective aspect of financial well-being. Our character is the basis for determining whether life is joyful or not. Individuals who are living a joyful life exhibit “love, joy, peace, longsuffering, gentleness, goodness, faith, meekness, temperance” (Gal. 5:22, 23, KJV).
The Bible stands out as an authority in matters of finance, and gives guidance on applying financial principles. The story of Joseph, found in Genesis 41, provides a proven template for wealth management (grow, preserve, and distribute wealth). It would be wise for us to follow this template, because we know Joseph became one of the wealthiest people in the world of his time, even during a famine. He followed three basic steps. He discerned from God that a famine was coming, developed a plan, and implemented this plan. Like Joseph, students of the Bible have long known that “nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes” (Matt. 24:7, KJV). Those who, like Joseph, have faithfully prepared for what is now unfolding in our world are better positioned to weather the current challenges, which include the COVID-19 pestilence. For those of us who did not prepare, we can still benefit from applying biblical principles; when it comes to financial planning, it is better late than never. The Bible even calls for a financial plan that lasts for eternity, and counsels us to lay up our treasures in heaven (Matt. 6:19, 20). Are we laying up our treasures in heaven, or just here on earth?
In this article, we covered the foundational principles that prepare us for the next installments, where we will be delving into the specifics of how to enhance financial well-being. It is incumbent upon us to develop the foundational skills needed in order to wisely build, preserve, and distribute wealth. Rome was not built in a day. Let us use what is at our disposal today while identifying gaps and striving for financial growth. Even if our current situation is bleak, not all is lost; it is possible to make lemonade out of lemons. Let us learn together. Please engage with us on Facebook, LinkedIn, e-mail, and phone.
1 Consumer Financial Protection Bureau. (n.d.). https://www.consumerfinance. gov/. Retrieved from https://www.consumerfinance.gov/practitionerresources/ financial-well-being-resources/#:~:text=Financial%20 well%2Dbeing%20describes%20a,allow%20them%20to%20enjoy%20life.
2 Drucker, P. F., The Age of Discontinuity (New York: Routledge, 1992).
3 Texts credited to NKJV are from the New King James Version. Copyright © 1979, 1980, 1982 by Thomas Nelson, Inc. Used by permission. All rights reserved.
4 NEWSTART. (n.d.). https://www.newstart.com/. Retrieved from https://www.newstart.com/.