While the ancient nature of the text may not offer much insight for those consulting it for advice on the derivatives market or the moral underpinnings of playing "both sides" of a deal, there are still plenty of financial lessons that can be applied to modern life.
#1 Reduce debt
"The rich rules over the poor, and the borrower becomes the lender's slave." - Proverbs 22:7
Debt only empowers the wicked and drags down hope for your prosperity, the Bible says. Those ancient warnings against money lenders are just as relevant today for households that have maxed out credit cards, sought the immediate gratification of rent-to-own plans or taken on mortgages beyond their means.
On the other hand, There are times when you lend someone money that they would start avoiding you instead of paying you back, and you’ll almost never see them again. Don’t be like those people.
If you’re still in debt, pay what you owe. You may not know if your debtor is also having money problems.
Paying your debt shows that you value your relationship, showing your character.
Remember that debt is not only an issue of money but, more importantly, an issue of character and trust.
#2 Invest
There is an amazing story in Bible about investment.
Matthew 25:19-28
19 “After a long time the master of those servants returned and settled accounts with them. 20 The man who had received five bags of gold brought the other five. ‘Master,’ he said, ‘you entrusted me with five bags of gold. See, I have gained five more.’
21 “His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
22 “The man with two bags of gold also came. ‘Master,’ he said, ‘you entrusted me with two bags of gold; see, I have gained two more.’
23 “His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’
24 “Then the man who had received one bag of gold came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. 25 So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.’
26 “His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.
Just like the servent who gained five more bags from the five bag given by the master, the wealth we earn by our hardwork is not meant to be kept away in banks and safe deposit.
It needs to be invested.
If the wealth is not grown, whatever you have will be taken away.
#3 Diversify your portfolio and assets
"Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth," - Ecclesiastes 11:2
The secular advice to never put all your eggs in one basket is also reflected in the Bible. It is crucial that you put your investments in multiple asset classes.
By diversifying, you spread your risk if something happens in one of your investments.
The Bible doesn't delve into portfolio rebalancing or the value of emerging markets weightings. But in a far more poetic way, it suggests a careful distribution of your assets.
#4 Listen To Wise Counsel
"Plans fail for lack of counsel, but with many advisers they succeed." - Proverbs 15:22
Having mentors to guide you is very crucial in personal finance. You can’t just listen to anyone regarding money matters, especially someone broke. That happened for a reason, and usually, it is due to their poor decision-making.
You need mentors and anti-mentors to teach you more about money.
#5 Save for the rainy day
"Four things on earth are small, yet they are extremely wise: Ants are creatures of little strength, yet they store up their food in the summer." - Proverbs 30:24-25
An emergency fund is a biblical principle. Just like how ants store food during summer in preparation for the winter, we should also prepare during our good season to have something reserved when the time of financial trials comes.
#6 Make a budget and stick to it
"He asked, 'For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it—lest, after he has laid the foundation, and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish’?'" - Luke 14:28–30 (NKJV)
Always plan and make a budget for any new initiative. There should be monthly budget as well and always keep tap of where and how much is being spent.
#7 Give to charity
"He who gives to the poor will never want, but he who shuts his eyes will have many curses." - Proverbs 28:27
Bill Gates, Warren Buffet and the many other wealthy captains of industry who have pledged much of their wealth to charity may have a slightly better chance of squeezing through that eye of a needle. The good that comes through philanthropy is a recurring theme in the old and new testaments.
Also note that one should not click photos and publish on social media while doing charity. It should be done with trust in God alone.
"When you give to the poor, do not let your left hand know what your right hand is doing, so that your giving will be in secret; and your Father who sees what is done in secret will reward you" (Matthew 6:3).
