Finding True Financial Freedom

by Suzanne Lesser

In our September magazine, financial expert Howard Dayton—co-founder and former CEO of Crown Financial Ministries—spoke with In Touch about managing money God’s way. Here’s more of that interview, in which Howard shares his time-tested advice for anyone who wants to get a handle on budgeting, eliminating debt, saving, and investing.

In Touch: What first interested you in helping people become better financial managers?

Howard Dayton: Shortly after I was introduced to Christ, my business partner asked me to join him in a Bible study to find out what it said about money—something I knew nothing about. It took about a year to read through the entire Bible and identify each of the 2,350 verses that dealt with handling money. That had such a profound impact on my life—it totally, permanently transformed the way my wife Bev and I handled money, and helped our relationship with Christ.

That year, Luke 16:11 became my life verse: “If you have not been trustworthy in handling worldly wealth, who will trust you with true riches?” (NIV). True riches are found in an intimate relationship with Christ. That became my life’s passion—to not only help people learn how to handle money and become financial healthy, but to also help them grow closer to Christ. It’s been fun to see the Lord allow us to help people do that.

ITM:   What do you think is the biggest advantage of having a budget?

HD:  The biggest advantage I see to having a plan is that it forces you to track your spending. When we don’t plan, we spend on things that we don’t realize we’re spending on. 

I encourage people to think yearly. A friend of mine was helping a young lady with her budget, and they found out that she was spending $1,700 a year on Dr. Pepper. He asked this gal, “Do you like Dr. Pepper?” She said, “Yeah, but I don’t like it that much.”

So when we track our spending and think yearly, it allows us to see the [financial] impact of drinking a Dr. Pepper or eating out or having cable or whatever it might be that we don’t think is a lot of money. When you annualize it, all of a sudden it becomes a whole lot more money than you thought it was.

A budget is dynamic. There are going to be changes—not only month-to-month, but also when something major changes, like having kids. So it’s something you have to track.

ITM: How do you minimize the amount of effort you’re spending on a budget month to month?

HD:  The reason I don’t like the word “budget” is that, to me, that means a loss of freedom and endless hours of monotonous bookkeeping. I’m not coming from that place at all. I think it should be as sleek, as simple, and as appropriate for you as possible.

There are basically four types of budgets. All cash uses an envelope system—it doesn’t take a lot of time and is very effective. It’s kind of old-fashioned, but it really works. There’s the pencil and paper variety. There’s software, which does all the calculations for you. And then there’s Web-based budgeting as well. Pick the one that’s most appropriate for you, and keep the process as simple as possible. If you keep up with it  daily, it shouldn’t take more than five minutes at a time.

ITM:  What about on a weekly basis? 35 minutes?

HD:  I would say a half hour. I encourage people who are married to have a “money date” with their spouse each week, where you pray about your finances and review them together at an appropriate time when you’re not tired or grouchy—after you’ve eaten.

When the average couple talks about their money matters, usually it’s a small-scale war—so many arguments are over money. One of the most important things you can do is to celebrate your progress. That creates an environment of gratitude and encouragement within your marriage, which is so important.

ITM:  What about those areas where the Bible is silent? For instance, what if a couple has extra money, and one spouse wants to save it while the other wants to take a second vacation that year. 

HD:  I’ll tell you what Bev and I do. We don’t make any large financial decisions without each other’s complete agreement. If she feels really passionately about something, we’ll do that. If I feel really passionately about doing something, we’ll do that. If we both feel passionately about something and disagree, we won’t make a hasty decision. We’ll wait, pray together, and take as long as necessary until we clearly hear from God what direction He wants us to take.

ITM:  Younger people are often told to invest more aggressively. But in your book, I noticed you suggest investing conservatively if you plan to use less than $10,000—and then you recommend to become more risk-friendly as you earn more.  Why do you suggest that approach?

HD:  Proverbs 21:5 tells us that “Steady plodding brings prosperity; hasty speculation brings poverty” (TLB). I like to see families become increasingly healthy financially by first eradicating their debt and increasing their savings to three months worth of living expenses. Then, once all consumer debts are paid, you can become much more aggressive in allocating dollars toward investments. But again, a family needs to have a base of conservative investments. Then, once they have $10,000, they can allocate an increasingly large percentage to those with higher risks and higher rewards—like stock market or real estate. But there’s nothing horrible about having cash. It doesn’t earn any money, but it at least gives you that financial stability.

ITM:  Is it possible to find a financial planner who works specifically with people who don’t have much to invest?

HD:  Crown Financial (www.crown.org) has around 1,700 volunteer Money Map coaches who help people with the basics of creating a spending plan and eradicating their debt. But when people are ready to invest, they need the counsel of experienced professionals.

There are plenty of good Christian folks out there in the financial planning world. If you don’t already know someone from your church, the group I recommend is Kingdom Advisors (www.kingdomadvisors.org). Ron Blue is the president of that organization. What I appreciate most about them is their solid Christian worldview; they operate based on what God says about handling money and have a heart to serve people. 

ITM:  Is it always best to pay off unsecured debt before saving for long-term needs?  Are there any exceptions?

HD:  The key is to pay off your high interest rate debt first—that’s typically credit card debt. That’s “Destination 2” in the Crown Money Map financial plan, which comes before saving for long-term needs. The only time I think saving for long-term needs before paying off your consumer debt can make sense would be in the case of having a 401K where your employer matches your contribution to it. I’m an advocate of folks doing that because it’s free money. If you can make reasonable progress paying off your debt, go ahead and contribute just up to the employer’s match—no more.

ITM:  Is there ever a point where a person has too much savings or too much money on hand?

HD:  It’s really a matter of the heart. In 1 Timothy 6:17-19 (NIV), Paul makes it clear that the Lord has three instructions to those who are rich in this world—another name of someone who has more in their savings than they need. That passage tells wealthy people to first, “not be arrogant” or “put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment” (v.17).  Secondly, he says that they should use their money to “do good and to be rich in good deeds, and to be generous and willing to share” so they can store up for the treasure of a “firm foundation for the coming age, so that they may take hold of the life that is truly life.”

So you’ve got to balance savings with generosity. Matthew 6:21 tells us that where our treasure is, our heart will also be. If we focus exclusively on saving and investing and are not generous, our heart is going go toward those things. However, if you’re balancing that while being generous and obedient in your giving in order to honor Christ, then your heart will grow closer to the Lord.