A Roth IRA is an individual retirement account that offers a valuable future benefit: tax-free income in retirement. Although there is no up-front tax deduction for Roth IRA contributions as there is with a traditional IRA, Roth distributions are tax-free in retirement… when you follow the rules. Imagine saving the maximum into a Roth IRA of $5500/year ($458/month) from age 25 to age 60, successfully saving $192,500. Now imagine that the account was invested and earned an average of 8 percent annually… that account would have grown to $1,023,563. Wow, that is $831,063 more than you invested, and it is […]

In a recent North American survey by Allianz Life, more than 3 of 5 people between the ages of 44 and 75 said they worry more about running out of assets than about dying. Funding a 30 year retirement will take financial planning prowess as you juggle the effects of longevity, inflation, healthcare costs, taxes, market volatility, and regular living expenditures. Your retirement could last longer than you think. Since 1950, life expectancies have increased by more than 10 years (kclirary.lonestar.edu). According to estimates, if you are 65 and married, there is a 50 percent chance that either you or […]

With college costs increasing at twice the rate of inflation each year, most American families now intentionally view a college savings plan as a fiscal necessity, not an option. Today’s low cost four-year college will be $60,000 or more and a private school education will be $160,000. If you compound today’s price by the 8 percent amount that tuition has increased annually in the last 25 years, by 2023 your first grader will be paying $100,000 per year for education at a public institution (The College Board, Trends 2010). The future holds more for college graduates A college education is […]

Investing. This topic generates more discussion and controversy than virtually any other in the financial arena. Almost everyone wants to know how to make the most money with the least risk. But for believers, the question should not be where to invest, or how to invest, but why to invest. Should Christians speculate with money, or does God direct us to give our entire surplus to the needy? Which investments are compatible with Christian principles, and which are a compromise? Does speculation in the stock or commodities market constitute gambling? What is the scriptural justification for investing? When to invest […]

The home purchase decision is probably one of the most significant financial decisions a person will ever make. We must consider carefully if home ownership is within God’s timetable and will for us. We must face the following realities before making this decision. Owning a home may be the American dream, and is a privilege and a blessing, but is not always a prudent financial choice. Many young married couples have an expectation to be in their own home with new furniture and appliances within the first year of marriage, when it took their parents 10 to 20 years to […]

Whenever I have the opportunity to speak to groups or individuals on the subject of finance, I share two key scriptures of financial warning so that I can bring safeguards to those who will hear. These two scriptures call us not to be naïve, and to avoid financial mistakes that can cripple. The first scripture is: “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences” (Proverbs 22:3). In the Middle Ages, before people would build a castle or a community, they would first build the moat or wall to protect them. In […]

Did you know that the Bible speaks on the subject of finances more than any other subject? Why is this? God knew that this area would be one of our greatest challenges. Security in worldly things is a constant struggle, not only for non-believers but for Christians also. The basic problem is a lack of contentment. Many things can cause discontentment. We often tell ourselves: “If I lived someplace else, if I had more money, if I had a better job.” God tells us: “Keep your lives free from the love of money and be content with what you have  […]

Are you investing your money like it is your own, or like it is a gift from God? The Holy Spirit will reveal our true financial motives as we seek Him. Making money should be a by-product of doing what God has called you to do. Remember that peace does not come by building up material possessions.  If it did, the richest people would be the most at peace. Instead, many times, they are often the most miserable. True peace comes only from God. As we read in John 14:27, “My peace I give to you, not as the world […]

The first step of the financial planning process is finished. You have figured out where you are financially by calculating your net worth and summarizing your cash flow. These reports have identified some obvious problems, financial strengths and some action steps to take. So what do you do next? It has been said that a man without a plan is like a ship without a rudder – he will end up somewhere, but probably not where he intended. That brings us to the second step of the financial planning process – the “where you want to go” question – setting […]

Last month’s article dealt with step one in determining where you are financially. You learned that calculating your net worth/balance sheet (what you own minus what you owe) was the starting point in developing a biblically-based financial plan. This month you will become familiar with step two, which is calculating your summary of cash flow/income statement (what’s coming in minus what’s going out). This starting point will identify any obvious problems, financial strengths and some immediate steps that can be taken (i.e. spending less than you make). If the statement of net worth is like a snap shot, then the […]