financial freedom for families session 2

Financial Freedom for Families – Session 3Marcus G Valles

Financial Freedom, … the journey so far:

Session 1o Biblical Foundations

o Luke 14:28, can you finish your tower?o 1 Tim 6:9, … those who desire to be richo King Agur, … neither rich nor poor

Session 2o First 3 Steps to Financial Freedom

1. Financial Physical2. Set Goals3. Spend less than you earn (reflected in your

Income Statement)

Session 3 Session 3 … Final 3 Steps

4. Build Emergency Cash5. Eliminate and Avoid Debt6. Invest for the Long Term

4. Build Emergency Cash

Liquidity The ability to have an asset turned into cash

on hand when there is an emergency Liquid Assets?

Risk management Kinds of emergencies

Companies downsize Cars break down Medical emergencies occur Cash flow reduces the cost of things

How much Emergency Cash to have? Depends on your income stability, job

security, debt situation, plans for major purchases, comfort levels

If good job security: 3 months living expenses (see income

statement) If 100% commission job:

6 + months living expenses

5 Places to Find the Extra Money for your Emergency Cash1. Use Ebay / Garage sale etc to sell items

you no longer use or need2. Reduce Income tax withholding if you

regularly receive a large tax refund3. Save unexpected income such as work

bonuses and monetary gifts4. Combine or close small savings accounts5. Consider your Savings Account a priority

every pay period6. … be creative … there are more ideas!

Where to put your Emergency Cash Account1. Savings Account2. Cheque Account3. Credit Unions4. Term Deposits

How to Use your Emergency Cash NOT FOR:

Gifts Impulse

purchases Vacations! … you need to

save and plan for these

Saving Cash versus Hording

Saving Emergency Cash (Proverbs 6:6-8) 6 Go to the ant, O sluggard;

    consider her ways, and be wise.7 Without having any chief,    officer, or ruler,8 she prepares her bread in summer (stores)    and gathers her food in harvest (gathers)

Is different to …. Hording Be wary of your feelings

Num 26:2 … Counting for Preparation (based on trust & obedience)

2 Sam 24 … Counting for Confidence (based on Good feeling, sense of security, faith boost)

Steps to Saving and Investing

5. Eliminate and Avoid Debt

When we use credit to borrow Debt is pre-committing your future income Consequences of Debt:

Reduced financial freedom in the future Reduced mental, emotional and financial comfort

levels Unable to take better opportunities in the future The “monkey on your back” will dictate your future

decisions Benefits of Debt Free Living

Lifestyle of freedom and opportunity Less anxiety and pre-occupation with lenders

Dangers of Debt Financial

Compounding works against you … the spiral speeds up Getting in is easier than getting out Debt limits the future Debt presumes the future, presuming a certain economic

future may take you into financial bondage

Spiritual It may deny God an opportunity to provide … a quick purchase

on borrowed money does not require faith It may limit our opportunities to serve God, giving, serving,

educating A family’s stress levels will increase Your reputation and testimony will suffer if you are unable to

pay or forced into bankruptcy

Family Uniting Against Debt

It is pleasant to dwell in unity … Ps 133:1

Husbands are far more likely to risk losing capital on “investment deals”

6 Steps to Tackle DEBT – TOGETHER1. Admit changes need to be made2. Determine the real reason for the debt3. Determine current Income Statement4. Consider steps to get out of debt5. Develop a repayment plan6. Reduce your living expenses to halt

the accumulation of debt and free up money for repayments

6. Think Long Term with Investing There are no silver bullets in investing

Biblical vs Worldly Views

10 Most Common Investment Mistakes

10 Biblical Principles of Successful Investing

… Finally …Focus