Personal financial planning is the process of developing a strategy, a road map or a plan of allocating financial resources to specific purposes to achieve a desired outcome. Like any strategy development of an organization, this takes place in a context or framework. Each organization is set up to achieve a specific purpose, most serve a specific need in society in a manner to provide a financial reward to owners of the organization. Similarly, in personal finances, it is essential that you be clear about your reason for existence since this informs what you do with your finances.
Why are you alive today?
What is your worldview or belief regarding your existence? What are you here for besides taking care of your personal and family needs, have a good life, making money to retire comfortably and eventually die? A life of pursuit of the next big and glamourous thing or financial security eventually disillusions since there is no end to newer and better things. In addition, the one thing we have learnt in this COVID season is that we are not in control of anything and what we currently hold as our security can vanish in an instant.
As a Christian, I adopt the biblical worldview where I go back to my creator to find out why he created me. In the words of Ephesians 2:10 (NLT), “For we are God’s masterpiece. He has created us anew in Christ Jesus, so we can do the good things he planned for us long ago”. I believe that God has placed me in my unique circumstances to do specific things that he planned for me to do long before I was born; this is my life mission and calling. I need to find it and fulfil it so that I can accomplish the purpose for which I was created.
From the scriptures, we learn that we need to use our financial resources wisely to take care of various God-given priorities that include personal, family, work, church, world and government needs. These priorities present themselves as financial obligations in relation to our:
- Personal needs: We have personal preferences in respects to needs and wants.
- Role related needs: As a spouse, parent, child, relative, friend, employee, member of a church, citizen
- Calling related needs: We are all called to do good works which were prepared in advance for us to do
As our creator and our source, God owns everything. He assigns and entrusts specific resources to each one of us expecting us to use them wisely meet the priorities he has allowed in our lives. Money therefore, becomes a tool to accomplish personal, role related and calling related needs by creating financial, social and spiritual capital.
Financial Planning Framework
The financial planning framework therefore provides the context of allocating God’s resources to meet our personal needs, empower us to fulfil our responsibilities arising out of our multiple roles and enable us to fulfil our calling.
Having established the financial planning framework, the next step is to allocate the financial resources to the various needs. This is the financial planning process. In our next article, we will look at this process in details.
The scriptures clearly articulate the context in which we should utilize God’s resources as per a sample of these verses:
- 1 Corinthians 6:19-20 (NLT): Don’t you realize that your body is the temple of the Holy Spirit, who lives in you and was given to you by God? You do not belong to yourself, for God bought you with a high price. So you must honor God with your body.
- 1 Timothy 6:17-21 (NLT): Teach those who are rich in this world not to be proud and not to trust in their money, which is so unreliable. Their trust should be in God, who richly gives us all we need for our enjoyment. Tell them to use their money to do good. They should be rich in good works and generous to those in need, always being ready to share with others. By doing this they will be storing up their treasure as a good foundation for the future so that they may experience true life.
- 1 Timothy 5:8 (ESV): But if anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever.
- Romans 13:1-7 (NLT)
Vs 1, 6
Everyone must submit to governing authorities. For all authority comes from God, and those in positions of authority have been placed there by God.
Pay your taxes, too, for these same reasons. For government workers need to be paid. They are serving God in what they do.
- Mathew 6:19-21 (ESV): Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.