The summer of 2008 was not a pleasant one for the American economy. Gas prices skyrocketed from one all-time high to another, the stock market plummeted at a pace not seen since the Depression and the number of home foreclosures continued to set records. The credit crunch and housing crisis continued to stifle the slowing economy, leaving many American families with increasingly little financial breathing room.
Whether officially a recession or not - and the majority of polled Americans do label it as such - the economy is certainly on the downturn, and in a climate such as this, tithing and charitable giving are often the first things to be cut from budgets. But shouldn’t Christian financial stewardship be the same no matter what the state of the economy?
Jim Canning, an associate professor of finance and management at Biola’s Crowell School of Business, believes that as Christians we are called to honor the Lord by giving him the first part of our income (Proverbs 3:9), not waiting to see if we have anything left over.
It’s not about a prosperity gospel, said Canning, but rather an expression of our love for the Lord and thanks for the blessings we have. Christians should trust that God will provide if we honor him with our giving, though obviously we still have to use judgment, especially when times are tight.
“It’s easy to be a good steward when things are plentiful,” said Canning, “But in hard economic times, a steward just has to be wiser with their money.”
There are many practical ways that Christians can manage their money wisely in the midst of a constricting economy. Most importantly, said Canning, is the elimination of credit card debt. Most Americans spend more than they make, purchasing things with credit cards and worrying about it later, but this kind of debt can accumulate quickly and is very costly.
Canning suggests that an easy way to eliminate credit card debt is simply to discipline oneself to use cash whenever possible. The average person who typically uses a credit card will spend 34 percent more than the person who typically uses cash, he noted.
But in addition to trimming expenses and cutting down on debt, it is also smart to wisely invest whatever surplus money one does have.
One of the wisest investments someone can make is to sign up for a retirement plan - whether a 401(k) or a 403(b) - that their company is offering, especially if there is a company match involved, said David Little (’93), vice president of Eclectic Associates, a financial planning firm in Fullerton, Calif.
Other smart ways to use surplus money include paying down debt, opening a Roth IRA or establishing an education fund for children.
It is also important to not let charitable giving and church tithing fall to the wayside during tough economic times, Little said.
As a financial planner for 15 years, Little said he sees clients’ tax returns and is constantly amazed at the high salaries and “woefully low” amounts of giving, even among Christians. To him, giving to the church or other Christian organizations is a crucial part of stewardship.
Canning agrees, suggesting that Christians should seek God’s wisdom and pray about where to give their money. Resources like the Evangelical Council for Financial Accountability can also help guide Christians in wise charitable giving.
“Investing in the Lord’s work is investing in eternity,” said Canning. “Giving to the Lord is one of the wisest investments you can make.”
How much we can give, however, is largely dependent on how we manage our finances, and Canning and Little agree that it all comes back to self-discipline and prudent planning for the future, living like the diligent ant in Proverbs 6:6.
“In times like these we learn the lesson,” said Little, “that reckless use of our money in good times can reap very negative consequences when times get tough.”
The best advice for how to deal with a recession, then, is perhaps to just be ready when it comes. Good stewardship with our money, after all, is something we should always aspire to, not just when the economic push comes to shove.
Tips for financial success in a recession:
- Pay your bills faithfully.
- Prioritize your debt, making sure you don’t compromise your home or your transportation.
- Negotiate with creditors as needed. Be proactive.
- Pay extra whenever you can to accelerate payoff dates.
- Have part of your paycheck automatically transferred to a savings account.
- Keep some money in a secure emergency fund for unforeseen expenses.
- Discipline yourself to use cash rather than credit cards.
- Control spending on non-essentials.
- Have a garage sale to generate extra cash to pay down debt or to increase savings.
- Cancel cable/satellite or other superfluous monthly expenses.