Developing Horizons Magazine (2).pdf Spring 2015 | Page 14

Planning Principles That Manage and Grow Our Money
By Julia Jorns, CPA

In order to manage and grow our money, we must

understand and embrace the four transcendent
principles of financial success. They are

1—Spend less than we earn
2—Avoid use of debt whenever possible
3—Maintain liquidity. In other words, maintain an emergency savings fund
4—Set and be disciplined to achieve long term goals.
We set budgets and make plans with these principles as
guides.
In conjunction with the principles, we must keep in mind
that there are really only 5 uses of money:
Giving, taxes, debt repayment, saving and investing, and
lifestyle choices. By prayerfully considering our priorities
and commitments, we can create a plan that will allow us
to meet those commitments including the savings for long
term growth.
Our first plan will only be a starting point for our financial success. It probably will not work just as we might like.
So we revise and re-evaluate the plan, our money habits and
attitudes until we reach a workable successful plan. As our
life moves along and circumstances change, the plan will be
more of a moving target than a fixed point. Each change in
our life or financial circumstance requires adjustment of the
plan. The wise use of income follows this simplified
general outline.

14

INCOME
LESS GIVING
LESS TAXES
LESS DEBT REPAYMENT
LEAVING NET SPENDABLE
DESCRESIONARY INCOME
LESS LIFESTYLE EXPENDITURES
LESS SAVING FOR LIQUIDITY OR
EMERGENCY
LEAVING AMOUNT TO INVEST TO MEET
LONG TERM GOALS WHICH GENERATES
GROWTH IN NET WORTH

Of the uses of money, paying taxes, debts and lifestyle
expenditures are consumptive. They use up financial
resources. Giving and saving are productive uses of our
money from which there is the possibility of growth or
return. In order for the end result of investing to meet long
term financial goals, the greatest area to keep under control
is the lifestyle expenditures. Today’s culture lures us away
from solid principles of managing finances into the following downward spiral into worry, money troubles and defeat
of current and long term goals:
INCOME
LESS LIFESTYLE
LESS TAXES
LESS DEBT REPAYMENT
CASH FLOW DEFICIT
ASSUMING MORE DEBT AND LESS
GIVING
NO ABILITY TO MEET LONG-TERM GOALS
CREATING AN UGLY DOWNWARD SPIRAL
Like any other skill or discipline that we might acquire
in our lives, you can see from the above outlines that managing our financial success is based on mental discipline.
If we manage finances successfully in today’s society where
we are constantly tempted to over spend on meaningless,
unnecessary items, a great deal of spiritual discipline and
maturity must also be exercised. Think