Financial Freedom Series: Building Blocks to Wealth—PART 1: Build Wealth Over the Short-Term, Medium-term & Long-Term

Biblical principles and cutting-edge money management wisdom to help you…

• Honor God with your money
• Build wealth
• Shrink your debt
• Build towards financial freedom

“But remember the Lord your God, for it is he who gives you the ability to produce wealth.” (Deuteronomy 8:18)

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

“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8)

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

“The rich rule over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7)

“But blessed are those who trust in the Lord and have made the Lord their hope and confidence. They are like trees planted along a riverbank, with roots that reach deep into the water. Such trees are not bothered by the heat or worried by long months of drought. Their leaves stay green, and they never stop producing fruit.” (Jeremiah 17:7-8) 

“Hope deferred makes the heart sick, but a dream fulfilled is a tree of life.” (Proverbs 13:12)

It is your time to dare to dream.
It is time to reset your goals.
It is time to rekindle your passion.
It is time to aim high.
It is time to attempt great things with God.
It is time to live on purpose.
It is time to reignite your vision.
It is time to be fruitful.
It is time to get positioned for God to 
catapult you into your destiny.

Your best days are ahead of you. 

In my daily business dealings regarding financial planning and through my interactions with people who read our blog at www.betteryouliving.com, from all over the world, and through CCFM, in the radio shows I present, many are…

• Battling to make ends meet, 
• Living above their means,
• Cash-strapped,
• Debt-ridden,
• Just trying to survive,
• Going through the motions, and
• Completely disillusioned.

The vicious cycle of defeat…

Debt is a significant problem that keeps many in bondage. High debt can lead to an erosion of cash flow, resulting in significant financial hardship, stress, and heartache. And this, in turn, prevents many from attaining financial freedom.

“The rich rule over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7)

Many are left cash-strapped, stressed out, feeling hopeless, anxious, and disillusioned.

Ask God for Help

You do not need to face your financial affairs alone.

God wants to walk the journey with you. 

Choose to Change

You can turn your financial situation around. With God’s help and a plan, you can change how you manage your money.

If you’re tired of living in debt and experiencing financial stress, you can change.   

Dave Ramsey says, “If you want something you have never had, you’ll need to do something you’ve never done!”

There is another way. Today, you can change. You can make a decision to give up on your old way of doing things that are not working. You can also consider modifying your approach to things that haven’t worked. You can develop a new strategy that can lead you to success. You can change. 

I believe that with God’s help, a plan, and some discipline, you can break the debt cycle and build toward a fruitful financial future. 

In our series, we have looked at a few basic essential building blocks:

1. Squash your debt – do your best to limit your exposure to debt

“The wise are cautious and avoid danger, fools plunge ahead.”  (Proverbs 14:15)

2. It is crucial to budget – keep a track of your income and where it comes from, as well as what you are spending and where. That way, you can ensure you spend less than you earn.

3. You need a plan – you need to know what your objectives are and how you intend to reach these objectives.

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

4. You do not need to do it alone. Ask God for help.

“Commit everything you do to the Lord. Trust him, and he will help you.” (Psalm 37:5)

Earlier in the series, we encouraged you to manage your money in the right order. 

Today, I encourage you to develop a habit of saving.

Once you are committed to saving, you won’t even miss the amount you put aside each month, and you will be surprised how quickly your savings grow. 

You might think you don’t have ‘spare’ cash to save, but review your budget. Reduce unnecessary expenses and free up surplus cash flow. It will be difficult at first, but it is doable. Build your savings into your budget.

Saving is important. 

Today, I want to ask you to consider breaking down your savings into three key categories –

• Short-term savings
• Medium-term savings
• Long-term savings

You can…

• Build up a reserve where you can have funds set aside for emergencies and opportunities that may arise.
• Put funds away over time to achieve future goals and dreams.
• Put funds away to build up a nest egg so you can one day retire.

1. Short-term savings

• These are funds you set aside to make use of within the next 12 months.
• Funds should be flexible and available.
• Funds set aside for short-term investment should be invested in low-risk investments. Being lower risk, returns are usually low and will struggle to keep up with inflation.
• Funds in short-term savings are set aside for…
  • Unforeseen emergencies,
  • Surprising opportunities that may arise,
  • Specific goals over the next year 
  • You should consider making use of bank savings accounts, where your money remains liquid and accessible at short notice.

2. Medium-term savings 

• These are funds you set aside to make use of within the next 2 – 4 years.
• Funds should be relatively flexible and available.
• Funds set aside for medium-term investment should be invested in low to moderate-risk investments, which should have the ability to outperform cash and inflation over the medium term. 
• Funds in medium-term savings are set aside to…
  • Meet specific medium-term goals,
  • Build good cash flow 
  • You should consider making use of a flexible basket of income funds (over 2 years), cautious stable funds (over 3 years), and moderate Capital plus Funds (over 4 years). These funds will give you the ability to generate moderate growth while having access to funds.

3. Long-term savings 

• These are funds you set aside to grow over the longer term: Over at least 5 years and onward towards retirement.
• Funds can be tied up over time.
• Funds set aside for the longer term can be invested in higher-risk investments. Being higher risk, returns may be volatile in the short term, but these investments will give you the ability to generate real inflation-beating growth over time.
• Funds in long-term investments are set aside to…
  • Provide for retirement,
  • Build up a wealth portfolio over the longer term,
  • Achieve long-term dreams,
  • Leave a legacy.

• You could consider making use of a diversified growth portfolio of Retirement Plans, Tax-Free Savings Plans, Unit Trust Funds, share portfolios, and Offshore Investments. You can make use of Balanced Funds (over 5 years) and Equity and Global Funds (over 5-10+ years), where you will have the ability to benefit from compound growth over the longer term.

There are numerous investment avenues to consider. It is therefore essential to create good diversification. 

I recommend consulting an experienced financial planner for guidance on constructing your portfolio to align with your unique goals and objectives.

Save before you are tempted to spend your money.

Set up a strategy to save over your life-cycle. Spread your money across different investments over the short, medium, and long term.

By saving cents, you get rands. If you save over time, before you know it, your rands will multiply and turn into thousands, then hundreds of thousands, and if you keep rolling your investments over the long term, they will turn into millions.

You can break the debt cycle and get building towards financial freedom.

Happy investing.