The Importance of Planning and Investing for the Long Term

        Suppose one of you wants to build a tower. Won’t you first sit down and estimate  
                 the cost to see if you have enough money to complete it?
                                                                                                                                      Luke 14:28 (NIV)

This scripture poses an interesting question for the 21st century. With easy access to lines of credit, home equity loans, and credit cards as far as the eye can see, how often do we count the cost? Like Veruca Salt in Willie Wonka and the Chocolate Factory, we are more likely to say, “I want it now!”

My translation of “count the cost” is: can I afford this? If I am making good decisions with my money, will I have to go into debt to pay for it? If I have counted the cost only to find I have to extend my payments into the future and pay interest, I’m not spending wisely. (This excludes your mortgage, of course.)

Lately I’m being hit from all sides with the message of “live within your means.” This is timeless wisdom and certainly nothing new for a financial planner. I went through a few weeks where I encountered several families who had not followed this principle, and as a result had gotten themselves into financial trouble that will be hard to reverse. While we should all be living within our means, here’s the reality in America:

  • Approximately 26% of adults have no savings set aside for emergencies, while another 36% have yet to start socking away money for retirement.
  • Through the end of 2014, the personal savings rate was 4.4%, which is a steep decline from the 10.5% rate in 2012.
  • An estimated 38 million households in the U.S. live hand to mouth, meaning they spend every penny of their paychecks.1

More recently, I’ve been challenged in the books I’m reading and the conferences I’m attending to live on as little as possible. I’m not talking about minimalist living, just being more intentional about what we need. The reason? To become an extravagant giver. How exciting would be if on a regular basis you could bless those in need in big and small ways?

If you have not been trying to live within your means you might be wondering where to start:

  • 10% tithe to the church.
  • 10% to your savings. You should aim to save 6 months of expenses and start saving college and retirement.
  • Live on 80% of your income. This includes mortgages, cars, other debt payments, any additional gifts and offerings and all of your living expenses.

This short scripture verse in Luke is one illustration Jesus gave as part of a bigger story. He was saying to his followers that you are making a commitment. You can’t follow me, and have it your way, too. There are great benefits to being a Christian, and some short-term sacrifices that you need to make.

That line of thinking also translates to your financial plan. You may want to retire at 66 or sooner, send your kids to college, travel, or give extravagantly. But to make those things happen, you need to count the cost, and make some short term sacrifices to reach your long- term goals.

When you are tempted by the short term purchases you want now, a financial advisor can be an objective voice to help you stay focused on what is important in the long run so you finish well.