By Chuck Bentley
Cash remains an important part of our financial transactions. Yet, we tend to forget how important it is to manage our cash.
According to the summary of the Diary of Consumer Payment Choice, a national study, cash still has a “dominant role” when it comes to small-value transactions. It also remains essential for lower-income consumers who may not have access to alternative payment options, and it is widely used for retail sector payments.
The study notes that cash “accounts for a relatively small share of total consumer transaction activity at 14%, while electronic methods make up 27% and checks 19%.”
The findings suggest that while consumers may not use checks or electronic payments very often, they prefer those methods for high-value transactions. “The average value of a cash transaction is only $21, compared with $168 for checks and $44 for debit cards.”
I have three tips to help you manage your cash.
1. I recommend that you always carry $100 in cash in your wallet or purse. This protects you from a circumstance where you may not be able to use a check or card to make payment, plus it is a back up in emergency situations.
2. Second, keep one month of your total living expenses in cash safely stored at home in a fireproof safe. This allows you to avoid making runs to the bank or local ATM when you need cash; you have money on hand for travel needs and are simply being wise if you were ever unable to access your bank accounts via the internet.
3. Finally, pay in cash more often. It is one of the last ways remaining to keep our financial transactions somewhat private, which I think is an important aspect of our freedom we don’t want to lose.
Originally posted 4/20/2015.
By Chuck Bentley
Forbes Magazine columnist John Goodman had a lot of high praise for the nation of Singapore’s alternative to the American welfare system. He said:
Singapore has built an alternative to the European style welfare state. Think of all the reasons why people turn to government in other developed countries: retirement income, housing, education, medical care, etc. In Singapore, people are required to save to take care of these needs themselves.
At times, the forced saving rate has been as high as 50% of income. Today, employees under 50 years of age must set aside 20% of their wages and employers must contribute another 16%. These funds go into accounts where they grow through time until specific needs arise. For example, one of the uses for these savings is housing. About 90% of Singapore households are homeowners—the highest rate of home ownership in the world.
In healthcare, Singapore started an extensive system of “Medisave Accounts” in 1984. Today, 7 percentage points of Singapore’s 36% required savings rate is for healthcare and is deposited in a separate Medisave account for each employee. Individuals are also automatically enrolled in catastrophic health insurance, although they can opt out.
For American workers the Social Security tax rate is 6.2% on income under $118,500 through the end of 2015. Further, our national savings rate is around 4%, which means by comparison, we are saving a total of 10% of our income. Singaporeans save a total of 36% of their income. This is similar to our Social Security system; however, their money is invested for them in a private account which allows for some access by the saver. For instance, a Singaporean can borrow from his or her own account for a down payment to purchase a house to avoid living in government housing.
I like it. We can learn from a system that works.
Originally posted 4/16/2015.
By Chuck Bentley
All of us have a theology of money, whether we realize it or not. And for us Christians, the church we attend has a theology of money. If you were like me, you probably never realized how much your behavior with money is controlled by your theology or philosophy of money. Here are some of the basics we teach at Crown.
1. God is our provider. In Genesis 22:14, He is Jehovah Jireh–the God who will provide. We look to Him to meet our needs.
2. God is the owner of all things. Psalm 24: 1 says, “The earth is the LORD’s, and everything in it, the world, and all who live in it.”
3. Since God is the owner of all things, we are his temporary managers or stewards. We are entrusted with the responsibility of managing God’s resources, not building our own kingdom.
4. The prosperity gospel is heresy and so is the poverty gospel. The Bible does not teach that wealth flows to the righteous or that possessions are evil. Both of these extreme theologies should be rejected. Luke 16:10-12 teaches that we are to be faithful to God with money:
“He who is faithful in a very little thing is faithful also in much; and he who is unrighteous in a very little thing is unrighteous also in much. “Therefore if you have not been faithful in the use of unrighteous wealth, who will entrust the true riches to you? “And if you have not been faithful in the use of that which is another’s, who will give you that which is your own?
When we get our financial theology right, our actions will begin to be transformed as well. God wants us to experience the abundant life and to thrive. This begins with knowing His Word and following His financial plans.
Originally posted 4/15/2015.
By Chuck Bentley
If you were to take the family out for dinner tonight, and after enjoying your food and fellowship sign an agreement to take out a mortgage loan to pay for the meal, you would likely think that was crazy. However, if you are carrying a $5,000 balance on your credit card and making the minimum monthly payment with a 15 percent interest rate, it is likely you will be paying for that meal for the next 18 years.
According to Bankrate.com, a low interest rate on a credit card balance today is 11 percent. In reality, that is a much more expensive rate than your home mortgage rate! I am not against the use of credit cards. They are convenient and in some cases essential for making purchases. However, I am totally against carrying a monthly balance of any amount. It is wasted money. If you can’t pay off your balance every month, I recommend two immediate steps.
1. Stop using your credit card and creating a bigger balance.
2. Make a plan to pay off your balance and get out of credit card debt as soon as possible.
There are a lot of good methods out there to help you pay off a credit card balance. The one that I prefer is to pay off your highest interest rate credit card balance first by making the largest possible payment you can afford to make on the principal of the loan. For instance, if you have a $5000 balance and your minimum payment is $125, pay your $125 and then add $125 to your payment toward lowering your balance. Increase your additional payment as you are able until you have a zero balance.
If you cannot pay it off each month, it is time to stop carrying a credit card.
Originally posted 4/14/2015.
By Chuck Bentley
“A recent study by Fidelity Investments focused on what it takes to become a millionaire without the help of a game show, and found that many people have the ability to accrue tremendous wealth…
“Fidelity’s seventh ‘Millionaire Outlook’ study looked at the potential investors have for moving up toward millionaire status. The key group in the study was the ’emerging affluent,’ which would be the people who seem to have both the resources and the interest/ability to live out their seven-figure dream.
“The key finding in the Fidelity study is that the millionaire-wannabees have six wealth-building factors on their side, factors that Fidelity showed were shared by people who had already reached and surpassed the million-dollar dream level.
“Those six wealth-building factors are: time horizon, career, income, self-made status, long-term focus and investing style.”
Here is what I found interesting… “Roughly 80 percent of the emerging affluent have either earned or increased their assets on their own” rather than relying on inheritances and the generosity of their families. As the old commercial goes, they earned it the old fashioned way.
Also, “they are focused on the long-term and making their money grow over time, rather than worrying mostly about what is happening to their money right now. Short-term moves mostly are made because they feel good in the moment, but long-term focus is essential to achieve savings growth over a lifetime.”
These factors align with God’s Word. We are to work diligently and to have a long-term focus. However, what Fidelity’s study does not cover is that true wealth is when we think eternally and lay up for ourselves treasures in Heaven and not on Earth.
There is nothing wrong with building wealth. God never condemns wealth in the Bible, but He does direct us how to use it for eternal purposes and to become “rich toward God.”
Originally posted 4/9/2015.
By Chuck Bentley
I think life insurance is a great idea and it is especially important for families to have adequate coverage. I did a little research on how to save money on life insurance and came across an option that I did not know existed.
Some insurance providers allow you to add a rider to your life insurance policy that can save you 5 percent all the way to 40 percent on your premium! This rider allows the insured to spread the death benefit out as a payment to the beneficiary over a period of years instead of a lump sum payment. For example, a policy with a $500,000 death benefit could be structured so that the benefit to the beneficiary pays out $50,000 a year for 10 years instead of a $500,000 lump sum.
This is a great option if:
1. You desire a lower premium and
2. You are okay with your beneficiary(ies) receiving payments over a set number of years.
One example of when this would be a great option is for a younger beneficiary, such as a son or daughter in college. Instead of your child receiving a lump sum that could easily be squandered, you set the payment over 10 years. Your son or daughter might blow through the money the first year or two, but they will quickly learn that using the money in a more prudent manner is the best way to go.
Proverbs 2:21 warns us: “An inheritance gained hastily in the beginning will not be blessed in the end.” A lump sum can be too much to handle, and it may better serve the needs of your family to have a long-term payout. I am going to contact my insurance company and ask about this option to see how much it can save us in the premiums we are paying.
Originally posted 4/8/2015.
By Chuck Bentley
A recent article in Business Insider headlined this news: Nearly half of all Americans save nothing. That is nada, zero, zip. Here’s the problem with the article. This is not news. This has been the practice for about the last than 20 years. The bigger question is Why? Why are we a nation with very few savers?
I scanned through the many comments to this article and a popular explanation is that half of our population thinks they don’t earn enough money to be able to save. To that I say, not true! If you are a low-income earner, you can’t afford NOT TO SAVE.
The reality is that everyone can learn to save something. I think there are three reasons people are not saving any money:
1. They have not made up their minds that it is important to save. We all can rationalize why we don’t save, but if we determine to do it, we are likely to practice it.
2. We have so many options to spend our money on things like mobile phones, cable TV, those over-priced coffee shops, and eating out that we give in week after week to spending vs. saving.
3. We have come to rely on our credit cards as a fall back in emergencies.
I believe anyone can save money. The average annual savings rate in China is about 40 percent, and they have a much lower average income than Americans. The first step is to determine that it is important; the next step is to make a plan. I am a fan of automatic withdrawals from your paycheck. The next step is to set a goal to save $1000 and get started. Finally, don’t stop. You will be amazed at how much better off you will be in 12 months.
Originally posted 4/7/2015.
By Chuck Bentley
The Huffington Post recently reported that 8 out of 10 Americans eat fast food at least once a month. That comes as no surprise, but their preferred choice did surprise me.
A recent study by Morgan Stanley asked the top 3 factors that people look for when choosing a restaurant. The results were: 1) Great-tasting food, 2) Good value for the money, and 3) High-quality food.
When ranking restaurants most visited in the past three months, the winner was McDonalds with 60 percent of all the respondents having eaten there. This was the top choice across the board for Baby Boomers, Gen Xers, and Millennials.
Why is this important? Fast food has become a way of life in our culture. It is convenient to pop in and grab a quick meal, but it is hard on your budget if it is a frequent habit.
My wife and I once led a group of teenage boys through a Crown study to teach them how to handle money. During the course, we asked them to bring $5 to go out to eat. But there was one catch before they chose their restaurant. We challenged them to spend less than $5 and whatever they had left over, we would use for a party at the end of the course. Well, they went to a low-end pizza buffet and skipped ordering a sweet drink. They spent about $4.25 each, so we had around $9 to spend on the party. Ann bought ingredients and made lots of baked treats. The twelve boys spent $51 total on pizza but could not believe how much food they got for just $9. Eating at home is far less expensive and better for you than eating out. Plus, choose carefully where you eat out—you can find coupons and specials that will save you lots of money in your budget if you do a little planning.
Originally posted 4/6/2015.
By Chuck Bentley
Yahoo Parents featured the story of an immigrant couple that moved to the US from the Philippines and turned their passion for home movies into a lucrative career—earning more than $1 million from their YouTube channel. But that is not the biggest surprise. Their home movies are best known for videos of their kids playing with Thomas the Tank Engine toys. Who would have ever thought that could earn you a million dollars from home!
The channel, which averages more than 3 million views a day, features their three children, 5-year-old Hulyan, 3-year-old Maya, and 5-month-old Marxlen. The majority of the videos—which are often more than 15 minutes long—feature the kids playing with Thomas the Tank Engine or Monster toys.
Mark and Rhea, who go by the YouTube username “ilovemaything,” are the parents behind the popular YouTube channel Hulyan Maya. In fact, “popular” may be an understatement: According to Tubefilter, which posts weekly charts of the most-viewed YouTube channels, the Hulyan Maya channel was the 42nd most-viewed U.S. channel last week. With more than 26 million views in just seven days, it fell just below the channel for NBC’s The Voice.
I watched a few minutes of some of their most popular videos and could not figure it out. Watching their children play with Thomas the Tank Engine did not interest me for one minute. Then I realized that I am not the target audience. Parents tune in for their children to watch! Essentially, it is a site that is safe for parents to let their own children enjoy.
Do you wonder if your idea will earn money? Follow your passion, start small, and test and refine it as you learn and grow. You will be surprised at how God can provide for you, even with an idea as simple as filming your children playing with toys.
Originally posted 4/2/2015.
By Chuck Bentley
I read with fascination about the news report of an Indian bride who walked out of her wedding ceremony after the groom failed to solve a simple math problem. The bride tested the groom on his math skills and when he got the sum wrong, she walked out. The question she asked: How much is 15 plus six? His reply: 17.
The groom’s family tried persuading the bride to return, but she refused. She said the groom had misled them about his education. The bride’s father supported his daughter’s decision by saying, “Even a first grader can answer this.”
Why is this story important to you and me? Well, it’s not really a story about the importance of math but the importance of honesty. When we marry, our relationship must be built upon honesty. You see, the bride realized that she was being deceived about the man she was supposed to be marrying, and she exposed the lie that he was well educated.
Many couples find it difficult to be honest with each other about their finances before and after they marry. I have counseled many couples that have faced this challenge. If this is one you face in your marriage, let me recommend the following steps:
1. Set an appointment to meet without interruption and discuss your finances together.
2. Pray together and commit not to get angry or rude when you discuss the areas where you have not been able to be completely honest with each other.
3. Disclose the areas that you have hidden or covered up. Ask for forgiveness and commit to work together to solve the problems this has created.
4. Let your spouse know you want to be unified and trust each other in all areas of your life.
5. Make a plan to correct this behavior and make yourself accountable to your spouse. If it was a private credit card or store account that you were hiding, close the account and don’t repeat the mistake.
Originally posted 4/1/2015.
