The 4 Functional Uses of Money

Heads up Soldiers! Many people believe (incorrectly) that money is the root of all evil. The Bible clearly states that the love of money is the root of evil. Money is amoral, neither good nor evil. It is a resource that has assigned value. Money is just a tool. The key to how money is perceived is the people who steward it. According to best-selling author and speaker Ron Blue, there are 4 functional uses for how we handle money: Live, Give, Owe, Grow. Money to live. Money to give. Money owed. Money to grow. Let me explain how this model works.

Money To Live

We all need money to handle our basic needs for survival. Abraham Maslow’s Theory of Human Motivation defines these survival needs as deficiency needs (Physiological, Safety). We’ve already learned that our 4 Essentials should be covered before anything else: Food, Shelter/Utilities, Clothing, and Transportation. We can fight to live another day if we prioritize these “true” needs. Controlling one’s spending involves understanding needs vs. wants. According to the Bureau of Labor Statistics, the average consumer unit (or family) spends $60,060 per year, and is trending upwards every year. The key to managing money is abiding by a spending plan (aka budget) and living on less than what you earn. For mortgages, it’s recommended not to exceed 25% of take home pay (interest, taxes, insurance). Don’t own a car which has a total value greater than half of your annual income. Spend money on things that increase in value, not decrease.

Money To Give

The most impactful thing you could ever do with money is to give it away. Regardless of your religion, you should be intentional about giving. The only remedy to guard against selfishness with your finances is generosity. Find a church or non-profit who’s making an impact in the community and support their cause financially. Additionally, look to help distressed family members and the underprivileged/financially stressed (homeless, widows, orphans, single parents). Include giving as a line item in your monthly budget. As to how much to give, this is a personal decision. Simply, yet joyfully give what’s purposed in your heart. As Christians, my wife and I follow the Biblical principle of giving 10% of our income. But we don’t stop there. Every year, we take a step of faith and increase the amount we give beyond the original principle of 10%. A word of wisdom: as your income and earning potential increases over time, learn to raise your standard of giving rather than your standard of living.

Money Owed

Part of being a good steward is limiting the amount of money owed to others. This happens with two major categories: debt and taxes. The good news is that you can be very strategic in limiting both of these payouts. Credit card debt, student loan debt, and auto loans are higher than they’ve ever been. Aggressively pay down your debt and learn to live a debt free lifestyle. Debt eats away at your income in the form of wasteful payments.

Debt payments aren’t the only form of owing. Enter taxes. Regardless of political affiliation or thoughts on government, taxes will need to be accounted for. Two wise actions to take with your taxes are to: 1) Seek the wise counsel of a good CPA or EA (Enrolled Agent) 2) Check/adjust your tax withholdings (especially if you’ve been receiving a large tax refund).

Money To Grow

Up until this point, we’ve discussed having money to live, money to give, and money owed. The last functional use of money helps us fortify our present and future. We need to be growing our money through the principle of saving. There are 4 primary reasons to save money: emergencies, large purchases, retirement, education. Having emergency savings of 3-6 months expenses keeps a buffer between us and life’s surprises. Saving for large purchases and paying cash/debit keeps us from using credit and racking up debt. Systematically saving (~ 10-20% *consult with a financial advisor*) for retirement ensures you have money to last during your latter years in life. Saving for the kids’ college prevents the use or limited use of having to take out student loans.

Soldiers, it’s now time to take action. Ron Blue’s Live, Give, Owe, Grow model paints a reality of simultaneous and competing priorities with our money. Which area do you need to be more diligent in? Write down two actions you can take for financial improvement. Oorah!


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