068 – APRIL 2009
5 STEPS
I have implemented these 5 steps to a bit of financial success.
1. GIVE. The most important step is the 1st one. This step is often neglected and simply should not be. Giving sets the entire plan into proper directional motion. It is a spiritual step that puts your finances and your life in order. 10% of your income is a good idea.
Luke 6:38 “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you."
2. SAVE. Not only do people not save anymore, but most folks are in debt. This
should not be. Save 10% of every dollar that you receive. Put it away and don’t look at it. A young couple earning $50,000 per year could invest 10%. At 8% interest, this couple would compound their annual $5,000 investment to over $2.2 million by age 65. (google - moneychimp / compound interest calculator)
Proverbs 30:25 “Ants are creatures of little strength, yet they store up their food in the summer;”
To this point, you might be saying “I can’t live on what I got … and you’re asking me to give and save 20% of that. Isn’t that impossible?” Answer: No! You’d be surprised.
3. INSURE. You do not want a catastrophe to wipe out your entire plan for saving. In some instances, it is mandatory - you must have insurance to own a house or drive a car. Health insurance with a medium deductible should protect you from any major financial setback.
4. NEEDS. Note that this is the 4th step! The list includes food, clothing, shelter, and transportation. Add to that - “debt reduction”. It has become a need.
5. EXTRA. If you have followed steps 1 – 4 correctly and you have extra, you can do what you want with it!!! Travel. Buy a diamond ring. Go to the movies. Buy a new piece of furniture. Throw a party. Whatever you want. It’s the 5th step!
It is simple and it works! I have used this 5 step plan every week of my professional life. I have taught it and I have written a children’s book about it.
My son was only 1 year out of college. I asked him if he was using the 5 step principle with his income. He said “Run through it one more time!”
I proceeded through the steps and he laughed out loud before he spoke, “I’m doing it all backwards! In reverse!”
That’s why so many folks are in such a financial jam. Think about it! If you use the steps in reverse, you will never get to steps 1 and 2. You may never be in a position to give or to save. Going down hill is a lot easier but only for a while. Eventually you will have to start making the climb again.
Proverbs 3:13 “Blessed is the man who finds wisdom, and the man who gains understanding,”
