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  • Writer's pictureValerie Clay

The 7 Principles of Prosperity -102

Updated: Aug 4

James 2:20 says, "Faith without works is dead (lifeless and useless)." You can believe God for a million dollars but this is useless without wisdom, understanding, and wise actions.

As I mentioned in The 7 Principles of Prosperity -101, it is imperative that we strive to be good managers of what God has entrusted to us. This means keeping up with maintenance for everything we own, including our finances.

Once we understand that good stewards are the ones that obtain God's blessings, it shouldn't be hard to then understand that there are steps to becoming good stewards. Here I have outlined these steps...

1. Maintain a Relationship With God.

God created us as spirit beings. It wasn't until the fall of man that we began living from our flesh. Jesus came to redeem us from man's choice to live as our own god. It is only through faith that we can now receive God's promises or understand His ways. When we learn to stop operating from our fleshly lusts, we can begin to live from our spirit, as God intended.

Worldly things, like our finances, either have a spiritual foundation, or they're disconnected from God. We want to be sure our finances are connected to God so that they can be blessed by Him.

God gives wisdom freely to those who search for it. Without wisdom, your finances will suffer. With wisdom, your finances will grow. It's that growth that builds a spiritual structure, a financial foundation. Everything you need can be found in wisdom...

"Happy is the man who finds wisdom,

And the man who gains understanding;

For her (wisdom) proceeds are better than the profits of silver,

And her gain than fine gold.

She is more precious than rubies,

And all the things you may desire cannot compare with her.

Length of days (long life) is in her right hand,

In her left hand riches and honor.

Her ways are ways of pleasantness,

And all her paths are peace.

She is a tree of life to those who take hold of her,

And happy are all who retain her."

Proverbs 3:13

2. Create a Budget.

A financial budget is an overview of your income and expenses. It is a financial plan for a defined period.

Without a budget, you can't create a plan for long-term goals.

Your budget needs to contain all of your expenditures including eating out, entertainment, and gifts. It is a good idea to plan your budget on what you've spent in the previous year or at least the previous six months.

3. Get an emergency fund.

The emergency fund secures your finances for hard times. This is a fund that you set aside and use only for true emergencies. You begin with a savings account and add money to it until it reaches $1000. Leave it in there for hard times. If you ever have to use it, you stop the rest of your spending until you get your emergency fund back to $1000.

4. Get life & health insurance if you don't already have it.

So many people get caught in a hard time without insurance. Their excuse is that they can't afford it.

When hard times hit, you can't afford to not have it! Get insurance so that during a time of sickness or death, you or your family won't incur financial hardship caused by medical bills or funeral costs.

The purpose of insurance is to protect your finances. Without it, you can end up in bankruptcy or deep poverty.

5. Debt-snowballing.

Paying off debts may seem impossible but it isn't. I like Dave Ramsey's debt snowballing and highly suggest using his method because it works.

Debt Snowballing- List your debts from smallest to largest (despite their interest rates) and pay the smallest one first. Ignore interest rates and keep putting all of your extra money (aside from your emergency fund) toward the smallest debt.

This gives you some small victories and motivates you to keep moving forward toward debt freedom. Once your smallest debt is paid, you take the money that you were paying toward that and begin to pay the next smallest debt until it is paid off. You keep doing this until all debts are paid. Trust me, it works! It worked for my husband and me and now everything is paid but the house. We now pay cash for things we want the majority of the time.

6. Save money.

Once your debts are paid, you take the amount of money you've been using toward debt and add it to your $1000 emergency fund.

The ultimate goal for the emergency fund is to save enough to cover 1 month's worth of living expenses. This way if you get sick or get laid off from work, you're prepared. You add this to your emergency fund and don't touch it.

After you have 1 month's worth of living expenses in your emergency fund, you then begin to invest the maximum amount allowed into your 401k and an IRA plan and save the rest in a separate savings account.

This way, your savings is separate from your emergency fund. Remember, your emergency fund is something you don't touch, so don't mix your savings with it.

In a separate savings account, you continue adding money to your savings until you reach your goal. Your savings goal will depend on a number of things such as what you plan to do with the money in the future or whether or not you want to start your own business or save for retirement.

7. Invest money.

Once you reach $5000 you should be able to invest in a high-yield savings account.

Once you reach $10,000 you should be able to invest in the money market; although the interest it draws is minimal until you reach $100,000.

After you reach 100k, you should be able to get about a 3% return from the money market at the current rate. There are other things such as stocks and bonds but I am not a financial advisor. I can't advise you on investing but I do recommend speaking to one if you're interested in investing as a long-term goal.

*Note - Depending on your situation and age, you may want to start investing in your 401k or IRA before all of your debts are paid. But because most situations are different, and there is no one-size-fits-all explanation on how to handle saving or investing, I suggest at least waiting until you get your 1 month's reserve in your emergency fund.

Once you reach your savings goals you may need a financial advisor or a tax professional to help you learn what options are out there. If you make it to this point, you've created a great financial foundation!

"Come unto me, all {who} labor and are heavily laden, and I will give you REST. Take MY yoke upon you, and learn of ME; for I am meek and lowly in heart: and ye shall find rest unto your souls. For my yoke [is] easy, and my burden is light.

Matthew 11:28

*Individual circumstances are unique. What works for me may not work for you.

If you have serious financial issues, I suggest speaking to a financial counselor or professional advisor.

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