In a very general sense, there are really only three things that you can do with money:
- Spend It
- Save It
- Give It
If you are handling money in a healthy way, you should be doing at least a little bit of each of these. The problem occurs when we lack balance in our finances and any of these three areas get out of whack.
Spending is the most common place where we lose our balance. Some people struggle financially because of income issues or because of setbacks like a job loss or a significant medical situation, but if we are really honest with ourselves, most of us struggle simply because we spend money we don’t have.
As long as you are spending more money than you earn, you will never get ahead. The problem we face is the advent of credit cards makes spending more than you earn a little too easy. They can mask our overspending until we wake up one day in a hole that we find very difficult to climb out of.
Most financial sites focus on the problems caused by having your spending out of whack and much has been written. But while spending is where we often focus, we can also be just as unhealthy in the areas of Saving and Giving.
Almost no one would suggest that we shouldn’t save. We all know the benefits of saving for a rainy day or preparing for future large purchases or life events like college or retirement.
Saving is good and you should be doing it. But is there ever a time when saving is bad?
We should be savers but there is a line where saving and frugality can cross into miserliness.
Frugality to the extreme
If you have worked hard, you are living on a budget, you have a fully funded emergency fund and are saving for other future needs, there comes a time when it is ok to reward yourself with a little spending.
Sometimes when people have struggled to pay off their debts and build up their savings, they find it difficult to loosen up and make purchase. They have been working so hard to get ahead that it becomes difficult for them to spend.
The bottom line is if you are healthy financially and are making progress toward your savings goals there is nothing wrong with buying something you want. Just make sure it is in reason. If you want to trade in that old beater and move up in car a little and all your other finances are in order there is nothing wrong with that. But if trading up means buying a new Lamborghini, then, unless you are a millionaire, that would probably be a mistake. I exaggerate, but it really is about ratios.
Saving is good, but it’s ok to enjoy your hard work a little along the way.
There is another danger to saving.
If you are not careful, that savings nest egg can easily become where you place your trust.
“Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there your heart will be also. Matthew 6:19-21 NASB
Jesus spoke more about money than he did about heaven and hell combined. I believe the main reason for this is because money more than anything else in our lives has the ability to take the place of God.
Savings are good and in many places the Bible tells us it is wise to save. But, if we are not careful those savings can become our source of protection and provision.
You may begin to believe “I don’t need to trust God to care for me, because I have it covered with my bank account and my 401K.” That is a dangerous place to be.
The third thing we can do with money is to give it away. There are few things that you can do with money that provide more joy than giving. As a Christian, I believe in tithing 10% to my local church and then giving after that as you feel led, but even something that is very good like giving can get out of balance.
Being too generous
I believe in giving. I believe it is part of managing well the things that God has given us. But that said, there can be times where it is possible to be too generous.
If you have a friend or family member who is constantly asking for money, you have to consider whether the gift is really helping or if you are simply continuing to enable behavior that is harming them. Giving a helping hand to a friend in need is loving; being an enabler of harmful behaviors is not.
Holding a closed fist
The opposite of this are those who have difficulty giving anything. They hold onto their money tightly as with a closed fist.
Whether it be motivated by greed or by fear, the root cause is often the same as those who are addicted to saving. It is a simple lack of trust that God will provide for our needs. “If I give money away, I might need it later, so I better keep it all just in case.”
It shows we have an unhealthy trust in money and also that we don’t really understand that we are simply managers of the resources that God has generously given us.
Keep all things in balance
The bottom line is all three of these items need to be a part of your financial world in moderation. How much largely depends on your income. If you are a single mom making $20,000 a year, simply giving a tithe to your local church may be a sacrifice. If on the other hand you are a millionaire, you might be able to easily give 25%, 50%, or more of your income and still be very healthy. The same ideas apply to spending and saving.