God calls Christians to be good stewards of the resources he has provided. Managing personal finances is not just about achieving financial success but also about honoring God through our decisions. The Bible speaks to the importance of wise financial management and stewardship in many places.Not everybody enjoys personal finance, which is why I boiled it down to just seven numbers. These seven numbers can help you gauge your financial health, stability, and future.
1) Annual Income
Your annual income is the total amount of money you earn in a year. This includes wages, business profits, freelance income, rental income, and any other sources of revenue. As Christians, it’s important to acknowledge that our income comes from God and that we should honor Him in how we use it.
Practical Example:
Total Annual Income: $50,000 + $10,000 + $12,000 = $72,000
Scripture Reference:
"But remember the Lord your God, for it is he who gives you the ability to produce wealth." — Deuteronomy 8:18
God is the ultimate source of all provision. Recognizing this truth helps us stay humble and grateful, ensuring that we acknowledge Him as the giver of every good thing.
2) Annual Expenses
Annual expenses are the total amount of money you spend in a year. This includes everything from your mortgage or rent, utilities, groceries, insurance, tithes and offerings, taxes, and any other necessary costs. As Christians, it’s important to manage these expenses carefully, honoring God with how we allocate our resources.
Practical Example:
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Mortgage Payment: $18,000
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Utilities (electricity, water, internet): $3,000
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Groceries: $5,000
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Insurance (health, car, home): $4,000
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Tithes and Offerings (10% of income): $7,200
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Taxes: $10,000
Total Annual Expenses: $18,000 + $3,000 + $5,000 + $4,000 + $7,200 + $10,000 = $47,200
How to Find Your Annual Expenses:
To estimate your annual expenses, a simple method is to download the three most recent months of your bank statements. Once you have the three months of data, calculate the average monthly spending for each category (mortgage, utilities, groceries, etc.). Multiply each monthly total by 12 to get an annual estimate.
Scripture Reference:
"The plans of the diligent lead to profit as surely as haste leads to poverty." — Proverbs 21:5
Good planning is part of being a wise steward, and keeping track of your expenses is a key component in ensuring that you live within your means.
3) The Net Difference Between Annual Income and Annual Expenses
The net difference represents the gap between your income and expenses. If you have a surplus (income exceeds expenses), you have more money to save, invest, or give. If you have a deficit (expenses exceed income), you may need to make adjustments. To calculate your net difference, fill out the personal finance worksheet here.
Practical Example:
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Annual Income: $72,000
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Annual Expenses: $47,200
Net Difference (Surplus): $72,000 - $47,200 = $24,800
Scripture Reference:
"Precious treasure and oil are in a wise man's dwelling,
but a foolish man devours it." — Proverbs 21:20
When you have a surplus, it is an opportunity to be generous and invest wisely. A deficit may be a call to re-evaluate your spending and adjust your priorities to ensure financial health and faithfulness.
4) What You Own (Assets)
Assets are anything of value that you own. These could include your home, savings, investments, or any other possessions that have financial value. Christians are called to be wise stewards of their assets, using them to honor God and serve others.
Practical Example:
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Home: $200,000
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Retirement Accounts (401(k), IRA): $50,000
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Cash Savings: $10,000
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Investment Portfolio (stocks, bonds): $15,000
Total Assets: $200,000 + $50,000 + $10,000 + $15,000 = $275,000
Scripture Reference:
"The earth is the Lord's, and everything in it, the world, and all who live in it." — Psalm 24:1
Everything we own ultimately belongs to God, and we are entrusted with it to manage wisely. Acknowledging this helps us use our assets in a way that honors Him.
5) What You Owe (Liabilities)
Liabilities are your debts—anything you owe to others. These could include mortgages, student loans, credit card debt, or car loans. As Christians, we are encouraged to live debt-free and avoid being enslaved to debt (Proverbs 22:7). However, we recognize that sometimes debt is necessary, and managing it well is a part of good stewardship.
Practical Example:
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Mortgage: $150,000
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Car Loan: $10,000
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Credit Card Debt: $5,000
Total Liabilities: $150,000 + $10,000 + $5,000 = $165,000
Scripture Reference:
"The rich rule over the poor, and the borrower is slave to the lender." — Proverbs 22:7
Debt can limit your ability to be generous and steward well. While not inherently sinful, managing debt responsibly and working to eliminate it should be a priority.
6) Net Worth
Net worth is the difference between what you own (assets) and what you owe (liabilities). It gives you a snapshot of your overall financial health and progress toward financial freedom. Christians should view their net worth as a tool for stewardship, not as an idol to be worshiped. To calculate your net worth, use this online calculator.
Practical Example:
Net Worth: $275,000 - $165,000 = $110,000
Scripture Reference:
"A good man leaves an inheritance for his children's children, but a sinner's wealth is stored up for the righteous." — Proverbs 13:22
Your net worth reflects your financial foundation. It can be used to support your family, serve others, and build a legacy for future generations.
The maximized stewardship number represents the amount of savings and investments you need to accumulate in order to no longer rely on a paycheck. Some refer to this number as their "retirement number." The question, "How much do I need to retire?" is an important question to ask. However, the Bible no where talks about retirement as the destiny for working Christians. So, instead of retirement, the Maximized Stewardship Number reflects your ability to maximize your finances throughout your life, ensuring that you are equipped to support your family, give generously, and serve others when it comes to the latter part of life. This number is easily found by multiplying the most recent year of expenses by 25.
Practical Example:
Key Financial Rules of Thumb:
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The 4% Rule: The 4% rule suggests that you can safely withdraw 4% of your savings each year, ensuring that your funds last indefinitely. This rule is based on the assumption that your money will be invested in a diversified portfolio, and the growth will help sustain your withdrawals over time.
Example: If you have $1,180,000 saved, withdrawing 4% each year would give you an annual income of $47,200, which matches your annual expenses.
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The 25x Rule: This rule suggests that you need 25 times your annual expenses saved in order to withdraw 4% of it each year without running out of money. It’s a guideline to help you think about how much wealth you need to be able to maximize your stewardship of time, money, and resources.
Example: With $1,180,000 saved, you can withdraw 4% per year to support both your needs and your generosity.
Scripture Reference:
"Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things." — Matthew 25:21
Maximizing your stewardship ensures that you can be faithful in all things, supporting your family, living generously, and advancing God’s Kingdom.
Conclusion: Faithful Stewardship for God's Glory
By understanding these seven numbers, you can better align your finances with biblical principles of stewardship, generosity, and wise planning. Regularly reviewing your income, expenses, assets, liabilities, net worth, and maximized stewardship number will help you make informed decisions, honor God with your wealth, and prepare for a future where you can serve Him without financial worry.
