Starting the New Year Right!
Starting the New Year right, financially
What does good stewardship look like as we start the New Year? Proverbs 27:23 tells us to “Be sure you know the condition of your flocks, give careful consideration to your herds…” (NIV). In today’s terms that is equivalent to understanding what we own and who we owe, or knowing our “financial net worth”!
At the start of every year we should list the value of our assets and debts, and the difference between the two is our financial net worth. Below is a simple example:
Once we know our financial net worth, we can use it to set goals to improve it during the upcoming year. Here are two suggestions:
If your financial net worth is negative, don’t be discouraged as this is often the case if you are just starting your Biblical Financial Stewardship journey. A negative financial net worth means you have too much debt. Develop a plan to reduce your debt as quickly as possible. This may mean you need to make some hard decisions about cutting back expenses, selling assets you can live without to free up cash to pay down loans, or looking for ways to increase your income. Make it your goal to get your financial net worth positive as quickly as you can. Most people can do this within 3-5 years.
If your financial net worth is positive, set a goal to improve it by 10% or more. This goal should include a plan on how you will achieve this through monthly savings from your income, debt reduction, expected investment growth, etc. This may sound aggressive, but based on my experience is achievable with focus and God’s blessing.
At the end of the year you will do this again to measure your progress and success at hitting your goals, and repeat the exercise each year thereafter.
Everything we own belongs to God, and we have the privilege of being His stewards/managers. Let’s start the year by assessing where we are at and setting realistic goals to multiply what God has trusted us with.
Todd Payne, CPA, CMA, The Path Forward, Jan 2023