What do you think is the most important personal finance principle?
Is it living below your means? That is good advice and easily done, although many people don’t follow it. I have a video called Personal Finance Wisdom You’ll Hear Nowhere Else. In it I talk about the power of being very aggressive when it comes to pre-tax or business expenses and very frugal when it comes to personal and post-tax expenses. I’m a huge proponent of living below your means, however that’s not the most important principle.
Maybe it’s to get out of debt? It’s not that either. The truth is, I think you need to be cautious about paying off debt. I have a video that argues why you shouldn’t pay off student loans early. I also support never owning investment rental real estate free and clear, but instead having long term fixed rate, low interest debt against that real estate. It makes such a big impact on cash on cash returns. I have a video on that as well.
Perhaps it is to pay yourself first? This timeless principle of setting aside money for savings before you start spending your earnings is also great advice, but it’s not the most important.
Is it to own your own business? Of course, when you own a business you are in control of your time and how much money you earn. I’ve talked about how powerful it is to successfully own your own business and then take those profits and invest them. I also have a video directed toward graduates detailing how they can become wealthy as an entrepreneur rather than taking a traditional path. Is this the most important principle? It’s important, but it’s not the most important one.
How about to invest in real estate? Interestingly, this is also not the most important personal finance principle. I wrote the book on how to be a real estate investor, and I do think that real estate is the ideal investment. If you buy it correctly, you get instant equity. You get the potential for appreciation, and you can use leverage to acquire it. You also get the income from it, and if you own it long term you can get depreciation, making that income more of a tax advantage. I think it’s the ideal investment, however it’s still not the most important principle. What is the most important finance principle?
GIVING is the Most Important Finance Principle
Giving Is Returning
One day, back when I was homeless, I went to the church that I was attending and the message was about tithing. I had been to church as a kid, and I saw the plate go across the aisle, but I didn’t really know what tithing was all about. The pastor’s message was about how in Malakai the Lord was telling the Israelites that they had robbed him in tithes and offerings. The scripture says;
“Test me in this and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it. I will prevent pests from devouring your crops, and the vines in your fields will not drop their fruit before it is ripe.“
Tithes and Offerings
The pastor was using this scripture to challenge us to test the Lord in our giving of our tithe, which is giving a tenth of what you have. This is the only place in the Bible where the Lord says to test it. I had about $200 in my pocket. That was all my money for the week, so I gave $20, which is 10% of what I had.
You may be thinking that 10% is a lot and you don’t have it to give. I know, I didn’t have 10% then either. In fact, that was the difference between me going to Subway one day that week or eating beans. But I nothing to lose, I was already broke. I was willing to test some things, so I gave it a shot and here’s what happened.
Test the Lord
A couple days later I received an unexpected letter in the mail and opening it up I discovered a cheque for $200. The return address was a property that I had rented with three college buddies about a year before and the cheque was my deposit being returned to me. Now, this was back in my heathen days and we pretty much left that place a wreck. I didn’t expect my deposit back, but rather a bill for damages.
Having my deposit returned, especially a year later, was a miracle. Later I learned that the property, which belonged to Vanderbilt University, was demoed after we moved out to build a new building. Apparently they were obligated by law to give us our deposit back. I don’t know why the accounting took so long, but the timing was miraculous. The point is, I put $20 into the offering plate when the pastor told the entire congregation to test him, and a couple of days later I had $200.
Giving Impacts Everything You Do
God is not a cosmic vending machine and there’s a lot that can be said on this subject. However, I believe giving is the most important personal finance principle because it impacts everything you do. It’s the wind at your back. It is the thing that overcomes those circumstances that are truly outside of your control. Some of you can relate to what I’m talking about. You’re trying to get ahead, but there are circumstances in your life that you can’t control and they are pushing you back down.
I’ve been giving the tithing message at my church periodically for about the last eight years. I have spoken to thousands of people, some who have given consistently and others who haven’t, and the bottom line is this. It’s the most important principle.
Giving is Stewardship
Giving is simply returning because everything is the Creator’s. He owns everything, and we are stewards of it. The Creator is the source of any power you’ve been given, the power to get wealth and the power to do anything. Having this perspective really shapes the way you look at giving. You aren’t giving what is yours, you are returning what is His.
Giving Creates a Healthy Relationship with Money
Or as R.G Letourneau, one of my favorite Christian entrepreneurs says, “It’s not how much of my money I give to God, it’s how much of God’s money I keep for myself.” If we have the mindset that we are returning what is rightfully His, that also creates a healthy relationship with money. It eliminates greed because we’re not approaching it in terms of what’s mine, but rather with the attitude of being productive with the time and talents the Lord has given us. This also leads us to consider how we can have a positive impact society.
Giving Provides Purpose and Impacts Others
When you are returning to the Creator in a meaningful way, you are impacting lives. I often encounter people searching for their purpose in life. I can assure you, your purpose is not completely about you. Part of your purpose in this life is to contribute to and help the greater good.
When you see your purpose this way, you are impacting the world. It also means that you don’t see personal finance as a means to an end, such as early retirement. Instead you have a perspective that is focused on others. The more productive you are, the more you can help others. You don’t get caught in the trap of early retirement.
The More Productive I Am, the More I Can Impact Others
A lot of you wonder why I still work. I don’t need to, and I haven’t for a long time. One of the reasons I continue is because I’m a part of this returning program. The more productive I continue to be, the more I can impact other people’s lives. I have no interest in retirement. This is why I don’t talk about retirement in my teaching material. Instead I focus on being more productive, which also helps create a healthy relationship with money.
Giving Leads to Blessing
The Lord loves a cheerful giver. Above I mentioned this idea of a cosmic vending machine. That’s not how returning to the Creator works. This is about you giving back to Him what is rightfully His and then receiving His blessing. However, His blessing isn’t always money. There are other ways to be blessed other than money. The thing is, God has a bigger bucket, so the more you shovel at Him, the more He’s going to shovel back at you and there’s no way you can catch up.
I think it’s crucial that you understand this is not about putting something in and expecting something in return. You are giving because you are already more than blessed. This is about returning to the Creator and that gives Him the opportunity to bless you even more in every aspect of your life.
Where Should I Give?
This is a great question. John D. Rockefeller, one of the wealthiest people in history, found one of the biggest challenges was where to give his money. He could earn it faster than he could find organizations to plug those resources into. Fortunately, these days we have a lot of great organizations. I believe money is like manure. If you let it pile up, it will stink, but if you spread it around, it will fertilize.
I recommend you don’t return all to one place. If you are a Christian and part of a church community, you are called to tithe 10% to your local church. That is standard, and then everything above that is where you can be flexible.
Give Locally and Globally
I sponsor a lot of children around the world and one of my preferred organizations for sponsoring a child is Compassion International. It’s a great organization, and independent third party studies have proven their effectiveness. I also support Franklin Graham’s organization Samaritan’s Purse. They are a remarkable organization that provide aid as first responders to disasters. I also contribute to missionary work globally and locally. I was one of the founders of Orlando Serve Foundation, which is an organization that does extraordinary things for the homeless community in the central Florida area.
Orlando Serve Foundation
Orlando Serve Foundation hosts events in local community centers helping the homeless overcome legal matters and get their driver’s license back so they can get a job. At these events we bring in judges and technology so they can hold court. This solves some of the problems that the homeless have which are holding them down, in some cases for decades.
Testimonial from Orlando Serve Foundation:
This one gentleman was formally a successful business owner. He had a legal problem that had literally ruined his business and his life. His wife and children were living in a motel. The week of the event he had become so enraged that he was at the point where he was going to kill the people that had caused him all those legal problems. He wasn’t going to kill what he called innocent people, but kill the people that ruined his life.
Instead, he went to the “He Got Up” event with Orlando Serve Foundation, and got plugged in. After two years of struggling with legal matters that were ruining him, he got some of his legal matters sorted and headed in the right direction. He gave his heart to Jesus Christ, and his entire world changed that day. It wasn’t just his world that changed that day, but also his family and the people he thought about killing. This man’s story illustrates the impact of returning and spreading the blessing around.
You Are Called to Give
The great news is there are tremendous organizations out there that need more financial resources. In many respects, that’s what you’ve been called to do. You’ve been called to produce great economic results, so you then can spread them around wisely and fertilize those amazing organizations that are impacting thousands, if not millions of lives.
I also see this as a great opportunity for our country, which is so divided politically right now. If everyone was willing to be a part of this returning program, think of the amount of money that could go into private organizations that could help. Then we wouldn’t be dependent on the government for everything. We have the private organizations to do it. I don’t want to get too political, but I see a greater dream here.
I hope this helps you better understand the passion I have for this. Some of you may find this controversial, but I’m telling you, you won’t find someone who’s been giving like this any length of time say, “Boy, my life’s miserable.” You won’t find it. Test Him in this and see what happens. You’ll see, it is remarkable the way He can bless your life.