Financial freedom. Does that term sound idyllic yet lofty or even unattainable to you? Does it sound like a status you wish to achieve, but it feels like just a pipe dream?
If so, you’re not alone. But as daunting as meeting your financial goals can seem, it can be done through a commitment to controlling your money rather than letting your money control you.
One of the first steps toward attaining financial freedom is to know where exactly your money is going. To determine this, the Live, Give, Owe, Grow organization can be the perfect tool. Live, Give, Owe, Grow is a simple formula that can help you visualize your spending, saving, and giving habits and analyze the areas you would like to change.
To create a kind of pie chart, understand that money has four potential uses: money you live on, money you give, money you owe, and money that can grow. Each of these four receives one portion of your income.
Live: It’s important to determine how much of your income is being utilized for daily needs and wants—housing, groceries, utilities, entertainment, transportation, etc.—because for a lot of people, this is the largest percentage of their chart. Once you’ve discovered what percentage of your income is being used for living, you can decide if an increase or decrease in this area is possible. Strategic budgeting is helpful for this exercise to better understand your expenses.
Give: This percentage of your pie chart is how much of your income you give away, particularly through tithing, charitable donations, and to the ministries that are close to your heart.
Owe: Debt may sometimes be unavoidable, whether it comes in the form of credit card payment, a mortgage, or a loan. This pie chart percentage represents how much of your income goes toward debt repayment. Taxes are also included in the “owe” category because it is money that is owed to the government.
Grow: This category is for the percentage of your income that is saved or invested, such as in retirement accounts, college savings accounts, brokerage accounts, or other investment tools.
Once you have determined the percentages of your current financial status, the real learning begins. Knowledge is power, and now that you have the knowledge of where your money is going, you have the power to change it. Decide which of the four categories—live, give, owe, or grow—need to increase or decrease, and then adjust your finances accordingly.
Perhaps the “live” category needs to shrink so that your “giving” can grow. Maybe you need to temporarily increase the amount you pay towards loans so that you can get out of debt faster and begin to save more. With prayerful consideration and a fuller understand of your finances, you may determine what is best for your unique situation in consultation with a planning professional
Use these four categories to aid you on your journey towards financial freedom: (1) spend less than you earn, (2) give generously, (3) limit the use of debt, and (4) build your savings. It may sound basic, but it may be easier said than done. A financial professional who shares your values can help you implement these four foundation principles.
Financial freedom can be found when you learn your own spending, saving, and giving habits. You can take control of them in order to practice Biblically based stewardship. When we view our resources as gifts given to us by God to steward, we become more intentional with how we use those resources. Ambassador Advisors is here to help you set objectives for biblical finances and meet your goals over time.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions. Information has been obtained from sources believed to be reliable and are subject to change without notification. The information presented is provided for informational purposes only and not to be construed as a recommendation or solicitation. Investors must make their own determination as to the appropriateness of an investment or strategy based on their specific investment objectives, financial status and risk tolerance. Past performance is not an indication of future results. Investments involve risk and the possible loss of principal.