Financial Freedom Series: The Spender

Welcome back to our Financial Freedom Series, where we’re looking into God’s Blueprint for Building Wealth and Managing Your Money Well!

We dive into biblical principles and cutting-edge money management wisdom to help you…

• Honor God with your money
• Build wealth
• Shrink your debt
• And build toward financial freedom

Over the last month, we looked at the importance of improving your CASH FLOW so that you can build your WEALTH FLOW. We examined the importance of having an INCOME STATEMENT and a BALANCE SHEET, as this can help you revolutionize your money management.

What is Your Income Statement?

An INCOME STATEMENT is a statement that clearly shows your INCOME and your EXPENSES. 

INCOME refers to money that you EARN and causes money to FLOW IN.

EXPENSES refers to the money you SPEND and causes money to FLOW OUT.

Your income statement will show the FLOW of your CASH.

If you spend less than you earn, you will have a POSITIVE CASH FLOW.

If you spend more than you earn, you will have a NEGATIVE CASH FLOW.

Your INCOME brings wealth flowing IN. 

Your EXPENSES cause wealth to flow OUT.

What is Your Balance Sheet?

A BALANCE SHEET is a statement that clearly shows…

• Your ASSETS 
• Your LIABILITIES

An ASSET refers to any ITEM OF VALUE that can be converted into cash – WHAT YOU OWN. 

Your assets include…

• Cash in your bank savings
• Investments 
• Property 
• Personal items 

Your assets have the potential to earn extra income through interest, dividends, and rental income, which will cause more money to flow back into your income statement. 

A LIABILITY refers to any DEBT you have to re-pay, usually with interest – WHAT YOU OWE.

Your liabilities include…

• Loans
• Mortgage (home loan)  
• Credit and store card debts
• Vehicle finance 

Your liabilities will increase your expenses, causing more money to flow OUT of your income statement. 

Your BALANCE SHEET will give you a good understanding of your NET WEALTH.

To create WEALTH, your ASSETS need to be greater than your LIABILITIES.

If you spend all you earn, you will NOT BUILD UP ASSETS.

If you have too much debt, all your income will go towards LIABILITIES.

We have looked at WHAT TYPE OF MONEY MANAGER ARE YOU?

Do you GO WITH THE FLOW, or do you have a PLAN?

Are you a SPENDER or a SAVER?

Are you creating DEBT or building WEALTH?

Are you BREAKING-EVEN even each month, just spending all you earn?

Are you SHORT each month, thereby needing to take on debt or max out the credit card to get by?

Are you able to spend less than you earn, thereby being able to TURN YOUR INCOME INTO ASSETS?

The way you manage your money each month will affect your short-term stress or joy levels and shape your financial future. Will your current money management leave you broke or financially free in the future?

The simple day-to-day choices you make regarding how you manage your money often only show up in later years.

Are you setting yourself up for a brighter tomorrow, or is your current money management sabotaging your future goals and dreams?

The good news is that if you are prepared to change the way you manage your money, you can change your future destiny.

What Type of Money Manager Are You?

We have looked at 4 types of money managers…

• BREAK-EVEN MONEY MANAGER
• THE SPENDER
• THE MIDDLE-CLASS MONEY MANAGER
• THE WEALTH BUILDER

Over the next few weeks, we will also show you how to improve your money management. 

You can become a wealth builder and work towards financial freedom by making a few simple changes.

So today, let us unpack…

The Spender

If you are a SPENDER, you will have an ever-increasing debt burden that will steal your cash flow and leave you feeling stressed out.

A spender will often spend all they make and borrow more to make ends meet.

Spending decisions are usually based on nothing more than whether you can afford the monthly repayments. 

While spenders dream that one-day things will change, the debt cycle keeps them in bondage. A spender will think that if they earn more, their problems will disappear, but this doesn’t happen; the more they earn, the more debt they take on.

Spenders refuse to understand that the problem is not their income but rather what they do with it.

If you manage your money like a spender, your liabilities will keep increasing, leaving you disillusioned and overwhelmed, with debt to your eyeballs. Unless you change your ways, your debt will eventually spiral out of control.

Are you spending all that you earn and then taking on debt to cover the rest? Are you using your spare cash flow to qualify for credit? 

The Spender:

Problem: 

As a spender money manager, you will spend all your income and take on more debt.

You will keep collecting debt, thereby seeing your liabilities continually increase. Your debt can easily spiral out of control if you face even a small financial storm. 

If you manage your money like this, you will more than likely always stay in debt. This will result in more financial stress and prevent you from building your wealth portfolio, leaving you caught in the vicious cycle of living in a never-ending cash flow crisis.

Solution: 

Change your money management. Form good habits.

Shrink your debts. This will improve your cash flow.

Start investing part of your income. This will allow you to grow your wealth portfolio.

By investing part of your income each month, you can start converting your income into assets, thereby building towards financial freedom.

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)

Next week, we will examine THE MIDDLE-CLASS MONEY MANAGER and give you the solution to break the cycle and work towards financial freedom.

In Summary…

• To create wealth, you must squash your debt and spend less on your expenses.
• As you shrink your liabilities and build your assets, your wealth portfolio will grow. This, in turn, will generate extra income, thereby improving your cash flow and wealth flow. 

“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)

If you build margin into your budget and start investing your surplus income, you will BUILD WEALTH, which will SET YOU UP ON THE JOURNEY toward FINANCIAL FREEDOM. 

How Are You Managing Your Money?

Become a good money manager. It is your time to build towards financial freedom. 

• YOU CAN TURN YOUR INCOME INTO ASSETS!
• YOU CAN BE A GOOD MONEY MANAGER
• YOU CAN BUILD WEALTH 
• ABOVE ALL, DON’T FORGET JESUS
• MAKE JESUS THE CENTER, FOR HE IS YOUR SAVIOR AND WANTS TO WALK THE JOURNEY WITH YOU.

“The wise are cautious and avoid danger; fools plunge ahead with reckless confidence.” (Proverbs 14:16)