The following is a guest post from ESI who blogs at ESI Money. He’s a 50-something early retiree who has amassed a multi-million dollar net worth by following three simple steps to build wealth — earning, saving, and investing (ESI).
As most Christians know, the Bible has a wealth of information and advice about handling money and the ability to build wealth. The book of Proverbs alone provides enough guidance to fill many personal finance books.
Over the past 25 years I have applied three simple steps to become wealthy. At the same time, my knowledge of what the Bible says about money has grown. Somewhere along the way I realized that my actions mirrored what was in Scripture. And even better, as I changed my actions to better reflect the Bible’s teachings on money, I prospered even more.
Steps to Help You Build Wealth
There’s no way to cover every verse and every money angle talked about in the Bible in one post. But I would like to share three steps that I know will help you build wealth — all of which are supported by Scripture.
Step 1: Earning
“Do you see any truly competent workers? They will serve kings rather than working for ordinary people.” – Prov. 22:29 (NLT)
The first step to help you build wealth is earning money. And to no one’s surprise, the more you earn the faster your wealth can grow. Fortunately there’s a path to doing this.
The Bible says this path involves becoming competent in your work. The dictionary lists competence as “having the necessary ability, knowledge, or skill to do something successfully. Being efficient and capable.”
If you meet these criteria, you will “serve Kings.” In other words, you will rise to the upper levels of your chosen profession. As your responsibilities increase, so will your income.
Simply by itself, your career is a multi-million dollar asset. If you don’t believe me, do the math. Look at what college students start out making these days, add in some annual growth (even if it’s small), and spread that out over a 45-year career. You’ll get at least two million dollars — maybe more depending on where you start and what growth rate you use.
That’s good news! Your career is a valuable asset! Even better news is that those who are competent in their work can literally earn millions of dollars more over the course of their working careers. Their competence results in a higher rate of annual income growth. Over 45 years, even a 1% increase can result in a massive amount of money.
So how do you become competent? The short answer is that you have to treat your career like the asset that it is — and work to grow it like you would any other asset. More specifically, there are seven steps to growing your career. If you do these, you will not only be competent in your job but others will recognize your competence.
You will rise through the ranks until you serve Kings. And your income will rise with your abilities.
Step 2: Saving
“Take a lesson from the ants, you lazybones. Learn from their ways and become wise! Though they have no prince or governor or ruler to make them work, they labor hard all summer, gathering food for the winter.” – Prov. 6:6-8 (NLT)
Even ants know that to build wealth you need to save a portion of what you earn for future uses. If we emulate them and save a bit from every dollar we earn, we are on the road to wealth.
It’s so sad to hear of people who make tremendous incomes and yet throw it away by spending more than they earn. On the outside they look wealthy and appear to have it all together. In reality their bank accounts are on the brink of destruction.
Unfortunately, this is the case for most Americans. Their spending simply keeps up with their income or even surpasses it. They do not learn from the ants and they are not wise. They simply spend whatever they get. If you don’t believe this is the case, look at any study on savings rates, levels of emergency funds, net worth, and so forth. The results are so dismal that they border on being unbelievable.
A person might make a great salary as we discussed in step one. But if he doesn’t learn from the ants and spends it all, he is no better off at the end of the day.
This is why spending less than you earn is so important. In fact, it’s vital. I call the difference between what someone earns and what he spends “the gap” and it’s the key to financial success. The larger your gap, the more you save, the more fuel you have to super-charge your net worth.
So take a lesson from the ants and develop a plan to save a bit from everything you earn for the future. Because we all know that winter is coming and the wise store up for those times.
Step 3: Investing
“Dishonest money dwindles away, but whoever gathers money little by little makes it grow.” – Prov. 13:11 (NIV)
From what has been saved, the wise person now takes each bit and invests it little by little. From there the “miracle” of compound interest begins to take hold.
It starts out small, but gains momentum over time. The invested money begins to grow on itself. More is added a bit here and a bit there. That begins to grow as well. Over time the investments get to the point where they become the investor’s major wealth-generator. Simply by investing little by little over a long period of time – and time is key to investing success – the money grows to a large amount.
Of course there is the question of where to invest. The Bible gives guidance on this by encouraging us to diversify our investments to keep ourselves safe from any disaster (Ecclesiastes 11:2). From there the options are almost limitless. For me, I initially invested in low cost index funds for growth, then transitioned to real estate for income prior to retirement.
Apply these three steps and you can’t help but build wealth. It’s both wisdom from the Bible as well as basic math: earn a good salary, save and invest a portion of it, and over time become wealthy.
Wealth Isn’t Only About Us
As I said earlier, the purpose of becoming wealthy isn’t to just retire in style or live the good life. There’s nothing wrong with enjoying the Lord’s blessings, of course, but living high on the hog isn’t the main purpose of life in my opinion.
Instead I’d like to suggest that our main purpose for money is to help others — to give from our surplus so the needs of others can be met.
There are many verses and promises on giving in the Bible. One that simply amazes me is Proverbs 19:17 (NIV):
“Whoever is kind to the poor lends to the LORD, and he will reward them for what they have done.”
There are a couple of reasons this verse blows my mind:
- Imagine “lending to the Lord”. How is that even possible? That we would lend Him something that He would then “owe” us (which is implied since a loan is made) seems crazy! The Lord has given us so much and given so freely, the thought that he would be in debt to us seems impossible. And yet the verse says that when we are kind to the poor, we lend to the Lord. Of course “being kind” can include both monetary and non-monetary actions, but certainly giving money to help the poor would be considered kindness.
- Who wants to be rewarded by the Lord? My guess is that the answer is “everyone.” If so, this verse tells how to be rewarded.
Some of the greatest joys in my life have been because I generated excess wealth and was able to give to others in need. It’s more blessed to give than receive, but I can testify that it’s also more fun and rewarding.
One hope for my blog is that people apply the principles I discuss there, build wealth and give to help others who are less fortunate. This in turn creates a virtuous cycle — as people bless others, they will certainly be blessed themselves. I hope this post helps you become part of the blessing cycle.
Editor’s Note: I love this advice from ESI! I love even more that it’s found in the Bible. For people of faith, the teachings of the Bible should be the avenue through which we filter our decisions, even those about money. If you would like to study further on this topic, you can access on my resources page all the verses about money I found in the Bible.
Questions for Discussion: How has the Bible shaped your views about money and personal finance? In which area do you struggle the most – earning, saving or investing? Why so? If you could change one thing about your personal financial situation, what would it be?