Lesson Three

“Analyzing What You Are Steward Over”

“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….” (Luke 14:28)

            The Lord showed the wisdom of two people in Luke 14:26-33. One was a builder who sat down to see if he had enough money to completely finish building his house, before beginning to build. The other was a king who sat down to see if he had a big enough army to defeat his enemy. The lesson seems to be obvious….sit down and count the cost before you launch out!

            We believe also that there is wisdom in sitting down and seeing where you are financially before making any future plans and decisions about money. It is rare for a couple to sit down and evaluate and analyze their net worth, much less what their weekly or monthly cash flow margin might be. If and when it is done, it might be quite a surprise, depending on how well they have managed their income and spending. We believe the following things strongly indicate the need for this analysis:  

(1) To control spending;  (2) To lower debt;                                         (3) To establish financial goals;  (4) To successfully manage your money;                      (5) To have peace of mind.

            Successful money management is a planned process, step by step. An analysis gives an overview as to where you are financially at the present. It also indicates what your potential can be for the future. It is a process of listing all assets and liabilities, incomes, and expenses to see where you stand financially.

EXPLANATION OF NET WORTH ANALYSIS SHEET

            The listing of one’s assets and their true evaluation may not be easy, but an effort needs to be made to arrive at a figure that can be useful in planning for the future. Terms like liquid or non-liquid are used to identify whether they can be turned into cash quickly or if it would be hard to turn them into cash at the present market value. Some assets have the potential to generate income or to increase in value, while some do not or may even lose in value. The IDEAL is to have as many productive assets as possible that keep growing in value over the years. The listing of liabilities will require that all loans or installment payments be listed showing the approximate amount owed on each. Please note: monthly bills are not to be listed here. Thus, by subtracting liabilities from assets, you have your net worth. When all has been completed, it may be amazing just how much you have in assets!

EXPLANATION OF CASH FLOW ANALYSIS SHEETS

            This analysis should be broken down by the year into at least three necessary categories: (1) All Incomes; (2) Special Expenses; and (3) Living Expenses. The following suggestions will help you in your efforts to fill these in correctly.

INCOME: This needs to be gross income, not net or take home pay. Be sure to include all of your incomes as well. However, do not include what the company you work for pays in health insurance or their part of the Social Security taxes. But, you should include what is taken out of your income to pay health insurance, Social Security taxes, Income taxes and any other benefit they take from your income. You should also include what the company puts into a pension for you and what you have withheld from your pay check that goes into a pension or retirement benefits.

SPECIAL EXPENSES: This is made a special category because of the uniqueness of these expenses. The Bible speaks very plainly in regards to all three of these areas. (1) Giving. All giving in cash should be listed. The Bible gives us priorities and we strongly believe that giving is a  definite  priority  of  the  Christian.                                                       This  will  be  discussed  later  in  detail.                                            (Matthew 6:33; 1Corinthians 16:1-2; Proverbs 3:9)

 (2) Taxes.  Romans 13:7 makes it very clear that the Christian has an obligation to pay his dues to the Government. You should include what is withheld from the pay, as well as additional amounts that would come due. You should also include your half of the Social Security taxes.     Do not include other taxes you pay out of your pocket in this section. They will be listed under “Living Expenses.”  

(3) Debt.  Such passages as Psalms 37:21 and Romans 13:8 indicate that we are to pay our debts. You should list here such debts like car loans, credit card loans, etc., that you pay on Monthly. However,        do not include your mortgage loan here. That should be listed under “Living Expenses” also.

LIVING EXPENSES:  This is a term to identify those expenses that we have continually.  The three expense areas above should be paid first, and the “living expenses” come last since this is an area that we can do some adjusting on.

EXPLANATION OF THE CASH FLOW MARGIN SHEET

            After you have successfully completed the other two areas of information, you are now ready to see not only what kind of a position you are in financially, but to see if you are over-spending your income. This is often referred to as the Cash Flow Margin. The following process will help you find the answer to your Cash Flow Margin:

(1)  Take the total gross income from the Cash Flow Analysis Sheet and put it in the proper blank.

(2)  Take the total “Special Expenses” and place in their proper blanks.

     (3)  Subtract the total of these “Special Expenses” from your gross income. This will give you your “Net Spendable Income.”

     (4)  Take the total “Living Expenses” and place in the proper blanks.

     (5) Subtract your total from your “Net Spendable Income.” This will determine if you have any money left over or how much Cash Flow margin you have.

            The above processes can let you see quickly if you have a negative Cash Flow. If you do, it would seem you might have the following choices:

(1)  Find a way to increase your income(s).

(2)  Find a way to reduce your “Living Expenses.”

(3)  Dip into your savings (if you have access to it).

(4)  Borrow in order not to have a negative Cash Flow.

(5)  Or, find a way to reduce your Debts.

            It is important, in order to be good stewards of God, that our “Net Spendable Income” stays above our “Special Expenses” and our “Living Expenses.” Otherwise, we are not showing proper management of what God has entrusted to us.

            If we were to list an order of priority of how we spend our income, we believe it should be as follows:

(1)  Giving

(2)  Taxes

(3)  Debts

(4)  Living Expenses

            It is important for each one to understand that the view we hold about stewardship is revealed by: (1) One’s goals; (2) Priorities; (3) Convictions; (4) Relationships; (5) Use of Time; (6) Secretiveness or openness about finances.

CONCLUSION

            We would like to encourage you to fill out this information and keep it on file for future use, bringing it up to date every so often. Good stewards are FAITHFUL stewards of what God has entrusted to their care! How is your stewardship coming along?

Homework