9 Steps to Biblical Wealth Management

Part3

In the last issue, Bob Barber of Christian Investment Services began sharing his nine strategies for Biblical Wealth Management. Each day the world is given the opportunity to express their free will, and wealth management is no different. There are two choices – man’s way and God’s way. Also in the last issue, Bob shared with readers how to discover their purpose for Biblical Wealth Management, cash flow discovery and management that honors God. Barber states, “I hope by now readers are beginning to get an understanding of Biblical Wealth Management.”

The nine strategies for Biblical Wealth Management are:
1. Discovering your purpose for Biblical Wealth Management
2. Cash Flow Discovery and Management that honors God
3. Wise Risk Management
4. Estate planning that incorporates caring for your loved ones and others
5. Investing and Asset Allocation that uses Biblical principles
6. Setting up a Retirement Income Strategy that will last throughout your and your spouse’s lifetime
7. Wise Tax Planning Strategies that are legal and ethical
8. Philanthropic Planning and giving that creates a lasting legacy
9. Seeking Non-Proprietary, Fee-Based Biblical council

The third step in this process is Wise Risk Management. “I believe we need to first look at the definition of risk, then management,” offers Barber. Risk is exposure to the chance of injury or loss; a hazard or dangerous chance. Management is the act or manner of managing; handling, direction, or control. When it is all put together, according to Wikipedia, risk management is the process of measuring or assessing risk and developing strategies to manage it. Strategies include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.
Wise Risk Management is transferring the risk you do not wish to or cannot handle, to someone else who is willing to take the risk, for a fee. Risk can be transferred in six basic ways:
Life Insurance- to cover expenses such as debt, loss of salary, etc. in the event of the premature death of a “breadwinner”
Health Insurance- to pay medical costs due to sickness or accidental injury
Homeowners Insurance- to protect the home and its contents from serious loss, such as theft, fire or a natural disaster
Auto Insurance- to pay for repairs or complete replacement in case of accident or theft
Disability Insurance- to cover loss of salary in the case of a major accident or illness, resulting in the inability to continue working
Liability Insurance- to provide additional coverage in situations where a potential liability/lawsuit could exceed the limits of protection provided by the above policies, i.e. auto and homeowners insurance
Study this list and assess your financial situation. Put together a financial statement and ask this question: how much risk can I or my family handle (assets minus loans=net worth) if you did not transfer the risk? Barber explains, “Basically, if you died today, how long could your family live on your savings and investments? How long could you pay the medical bills from an accident or serious illness with the help of health insurance? How long could you live on your savings and maintain your current standard of living if you were disabled and could not work? What would happen if your neighbor’s kid had a debilitating accident in your backyard and you were sued for an amount above the limits of what your homeowner’s policy covered?”
The answers to these questions might be quite simple, however many continue with unnecessary risk. Bob offers this scripture reference, Proverbs 6:6-11 says, “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest. How long will you lie there, you sluggard? When will you get up from your sleep? A little sleep, a little slumber, a little folding of the hands to rest-- and poverty will come on you like a bandit and scarcity like an armed man.”(NIV)
The key is planning. Transferring risk in order to be prepared in case of tragedy is wise planning and it shows those you love that you care about them. Bob offers another scripture reference, 1 Timothy 5:8 says, “But if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever” (NASB). Proverbs 21:5 says, “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty” (NASB). Look at the list again; decide where you need to begin. Seek a financial representative to guide you through to the right choice for each individual situation.