5 Keys to Financial Freedom

What does financial freedom mean? For some, it means knowing that they have enough saved up for retirement. For others, it means having enough that they can spend without worrying about it. To those who are struggling to make ends meet, it might mean just being able to pay the bills every month.

The world tends to define financial freedom in terms of numbers – having zero debt or having a certain amount saved up or invested. And these are meaningful goals. But Scripture defines financial freedom differently. The Bible focuses our thoughts not on what we’ve done to provide for ourselves, but on how we’re trusting God as our Provider.

James warns us against presuming on the future, since we don’t know what will happen tomorrow (James 4:14). The world’s definition of financial freedom does exactly that – it projects a financial picture in the context of an overall economy that we can’t predict. But faith looks at financial freedom differently – our trust is in God rather than in a number.

The world’s definition and the Scriptural definition do contain some common elements – diligent earning, wise saving, caution with regard to debt. But the end goal is different. Worldly people seek financial freedom for their own good; believers seek it for God’s glory and for kingdom impact.

In this article, we’ll look at five keys to true financial freedom. Along the way, we’ll compare the Biblical model with the world’s model. And we’ll draw some conclusions about foundational choices the Biblical steward makes.

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Key 1: Framework

Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment.

1 Timothy 6:17

The foundational key to Biblical financial freedom is a framework of stewardship. In this framework, God owns everything and has entrusted resources to us to use for his purposes and for our enjoyment. Because we recognize God as our provider, we are able to put our hope in him.

How is this freedom? It’s freedom because it removes the pressure from us to take care of ourselves. That’s not to say that it removes all responsibility from us (the Bible is clear on our accountability to be wise stewards). But it  means that instead of seeing ourselves as the ultimate source of provision, we leave that to God – who has far greater resources than we do!

By contrast, the world’s definition of financial freedom puts hope in wealth. It sees individuals as owners rather than as stewards, so all the pressure to provide is on the owner – pressure to work and earn, to save, to spend and invest wisely, etc.

The problem with this is that wealth is by nature uncertain. Putting our hope in wealth is one form of presuming on the future. Economies fluctuate, affecting our investments, our currency, and possibly our careers. Our own needs change due to health, needs of dependents, and other unpredictable circumstances. So putting our hope in wealth isn’t freedom – it’s bondage.

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Key 2: Purpose

Once a framework of stewardship is established, the next key becomes almost self-evident. If God is the provider and true owner of all that we have and we are stewards of his resources, then we are accountable to use those resources for his purposes, not just for ourselves. God calls us to be faithful with what he has provided.

We’ve already seen that one of the purposes for which God provides resources is our enjoyment (1 Timothy 6:17). The world’s view of financial freedom stops there. But this is a view that denies our responsibility to God for the resources he has provided.  Jesus shows in the Parable of the Talents (Matthew 25:14-30) how accountability is an important characteristic of the kingdom of heaven.

Purpose-Driven Stewardship

Rick Warren’s book, The Purpose-Driven Life, opens with this iconic four-word phrase: “It’s not about you.” A key difference between the mindset of the world and that of the believer is how we determine our purpose. The world’s definition focuses on self: self-fulfillment, self-realization, self-gratification, etc. But the Christian’s definition centers around God.

And how do we glorify God? Jesus summed it up this way:

“‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment. And the second is like it: ‘Love your neighbor as yourself.’”

Matthew 22:37-39

In the context of financial freedom, Jesus’ commands require that we take a couple of important steps to align our spending with God’s purposes:

1. Define our priorities and non-negotiables, keeping in mind our God-given purpose.
2. Create a spending plan that reflects these priorities and non-negotiables.

While this process may seem to limit or restrict our financial freedom, the opposite is really true. A life lived for self rather than for God is actually bondage, as we become slaves to our own desires, to the ways of the world, and to wealth itself. And a life lived without a spending plan is like a car without a steering wheel – it’s not real freedom because we have no control over where we’re going.

Building a financial plan based on God’s purposes frees us to make decisions about earning, saving, and spending. Rather than being held captive by the world’s push to earn more and more (whether in order to save or to spend), we’re free to choose a lifestyle that balances work with other purposeful activities, like spending time with family or volunteering in the community.

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Key 3: Intentionality and Discipline

So then, each of us will give an account of ourselves to God.

Romans 14:12

Paul rebuked the Roman church for judgmentalism; apparently, they were judging each other with regard to their walks with God. Paul’s point in this passage was that God will require us to give account of ourselves; it’s not up to us to judge each other. His point about judging one another is also reflected in the Sermon on the Mount (Matthew 7:1ff).

But the point of giving an account of ourselves to God is also repeated in Scripture. In the Parable of the Talents (Matthew 25:14-30), the master on his return required an accounting from each of his servants for how they had used the resources he had entrusted to them. The rich man in Jesus’ parable about Lazarus (Luke 16:19-31) and the rich fool in another parable (Luke 12:13-21) both came up short in giving an account to God.

The Spending Record

If we’re going to give an account to God for how we’ve used the resources He has entrusted to us, we’ll have to know what we did with those resources. This is why we need to track and categorize our spending in a Spending Record. How can we account for resources we didn’t track?

Keeping a spending record requires discipline. Tracking and categorizing our spending is a foundational practice in our pursuit of financial freedom. Discipline might not seem like freedom at first; indeed, it seems much more freeing to simply spend where we want and not worry about it.

But this is the freedom of floating down a river on a raft. It’s effortless and probably fun – until we hit the waterfall. Tracking our spending is a bit like having paddles to enable us to direct our raft away from danger. Real freedom requires a certain amount of control.

The Spending Plan

So we’re going to give an account to God. But what will that account look like? If we want it to be a positive one, we’ll need to ensure that how we’re spending is pleasing in God’s sight. For this we need a Spending Plan – another key requirement for true financial freedom.

Like a spending record, the spending plan doesn’t seem like freedom – in fact, it feels like just the opposite. Intuitively, it feels more freeing to simply spend without a plan. But again, this “freedom” leads only downstream – to a destination where we have no control (and don’t want to go!). A spending plan is a boundary within which we’re free to spend without worry. By being intentional about planning our spending, we’re actually taking control of our money rather than letting it control us.

Tracking spending without having a plan is like driving with a GPS but without a destination. We might know exactly how we got to where we are, but it might not be where we hoped we were going. And having a spending plan without tracking is like having a destination but driving aimlessly and hoping to somehow end up at that destination. The chances aren’t good.

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Key 4: Margin

The wise store up choice food and olive oil,

but fools gulp theirs down.

Proverbs 21:20

Storing up some reserves is wise – but that requires margin. In its simplest form, margin is the difference between what we make and what we spend. It’s what allows us to save for the future. An intentional spending plan and disciplined tracking of spending can get us to this point.

Cash Flow

Having margin requires positive cash flow. That means that we spend less than what we make. Over time, it means that we don’t eat up all our additional earnings (raises, bonuses, etc.) with lifestyle increases. Instead, we allow those additional earnings to translate into extra margin. Here again, it feels like freedom when we allow ourselves to spend all that we make – but this freedom is illusory.

The first place that margin should show up is in emergency savings. Setting money aside for emergencies frees us from worry by enabling us to handle these emergencies without incurring debt. Suppose Sally Saver and Sam Spender both get a $2,000 bonus. Sam exults in the freedom of spending that money on a new toy that he previously couldn’t afford. But Sally sets that money aside, knowing that unexpected expenses will arise (it’s just a matter of when and how much).

Now each of them has a major appliance fail. Sally replaces her appliance using the money she had set aside, but Sam has to put his appliance on a credit card, adding debt load and putting further strain on each month’s budget. Which one is really free?

When we plan our spending such that our monthly expenses don’t use up all our income, we create margin and set ourselves on the path to financial freedom.

Net Worth

If positive cash flow has been established, this gives us a chance to build our net worth. Net worth is the difference between what we own and what we owe. For example, if we own a $400,000 house and we have a $300,000 mortgage, then that’s a positive contribution to net worth of $100,000.

We increase our net worth when we add to our savings or pay down debt. We decrease our net worth when we spend on credit, adding to our debt, or when we spend out of our savings.

Net worth feels less urgent than Cash flow. Cash flow is a “noisy” component of financial freedom. That is to say, if our cash flow is negative, it’s easy to see that we’re not really free – we’re heading in a downward direction. If our cash flow is positive, we’re headed in the direction of financial freedom.

Net worth, by contrast, is more “silent”, because it’s a longer-term concept. We can live month by month, meeting the bills and making minimum payments on credit cards and think we’re doing OK. But if we’re not building net worth, we’re really losing ground. We’re being the fools who gulp down everything they earn.

Debt

The rich rule over the poor,

and the borrower is slave to the lender.

Proverbs 22:7

Often, purchasing items on credit feels like freedom. We can have what we want, when we want it, regardless of whether we can actually pay for it. But again, this freedom is illusory. The debt that such spending entails actually enslaves us, creating additional financial pressure. If you’ve ever carried a significant amount of credit card debt, you’ve experienced this bondage.

One key to the pursuit of financial freedom is the elimination of consumer debt – sometimes called inefficient debt. This is not debt from mortgages, student loans, business loans, etc. (though such debts can also enslave us if we take on too much); instead, it’s debt like credit cards and personal loans. This is a bit of an oversimplification, but think of efficient debt as debt on things that appreciate in value (houses, education, businesses) and inefficient debt as debt on anything consumable or depreciating in value (including cars).

Prioritizing elimination of consumer debt over further consumer spending improves our margin in two ways. First, it improves our net worth through the reduction of what we owe. Second, it improves our cash flow by reducing the interest we’re paying on that debt each month. As a result, elimination of consumer debt is a high priority in pursuing financial freedom.

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Key 5: Generosity

Up until now, most of what we’ve said could be said by a secular financial planner. Spend less than you make, create margin, save for the future, invest wisely, reduce consumer debt, be intentional about planning and tracking spending – these are all things any financial planner would advise. And all of these help to build wealth. But are they sufficient to create real freedom?

The gospels tell the stories of two wealthy men that Jesus encountered: Zacchaeus (Luke 19) and the rich young ruler (Matthew 19). Let’s start with the end of each story. Zacchaeus, on encountering Jesus, welcomed him gladly and experienced great joy. The rich young ruler, on learning what Jesus required of him, went away sad. What was the difference? Generosity.

Zacchaeus had built up wealth over a period of time as a tax collector. The typical tax collector was known for cheating people and overcharging them, then pocketing the excess taxes. And in fact, this is probably how Zacchaeus had gotten wealthy. But when he encountered Jesus, everything changed. He made a quick decision to serve God rather than money (see Matthew 6:24), giving away half of everything to the poor and pledging to repay four times anything he had gained through cheating.

The rich young ruler had also built up considerable wealth. We don’t know exactly how he did it, but if we can believe his testimony of having kept the Law, he probably did it honestly. By all accounts, he would have been a more likely follower of Jesus than Zacchaeus would have. But his wealth had become his love. He couldn’t give it up to follow Jesus.

Which one was really free? By the world’s standards, both of them should have been – they both had plenty of money. But in reality, one was enslaved by his wealth. True financial freedom must include freedom from serving money.

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Biblical Stewardship Is Financial Freedom

It is for freedom that Christ has set us free. Stand firm, then, and do not let yourselves be burdened again by a yoke of slavery.

Galatians 5:1

Paul penned these words to a church that was in danger of becoming enslaved to obedience to the law. But the core principle of freedom in Christ has many applications. Peter wrote that we should live as free people (1 Peter 2:16) and Jesus even made the proclamation of freedom part of his mission statement (Luke 4:18-19).

Financial freedom – actual financial freedom, not the world’s illusion of it – is part of God’s desire for us. And Biblical stewardship is the road to this freedom.

Worldly Financial Freedom Doesn’t Work

The world’s idea of financial freedom doesn’t work for several reasons. First, the world doesn’t understand the true nature of money. It’s deceitful (Matthew 13:22) and uncertain (1 Timothy 6:17). It promises happiness but can’t deliver. And it’s fleeting, as the Parable of the Rich Fool highlights (Luke 12:13-21). There’s nothing about money that brings true freedom.

To be sure, we need money to meet our basic needs. And Scripture nowhere equates the accumulation of wealth with sin. The rich fool wasn’t sinful because he was rich; he was sinful because he was focused on self and not generous to others and rich toward God. The same was true of the rich man in Jesus’ parable about Lazarus.

There are many Scriptural examples of wealth being put to use for God’s purposes (for a small sampling, see Luke 8:1-3; Acts 2:44-45 and 4:32-37, in addition to the story of Zacchaeus).

These are all people who had money, but served God. The thing is, that’s possible, but it’s not natural. As we’ve seen, wealth is deceitful. It has a lure that can choke out the Word in our lives, keeping us from being productive and fruitful (Matthew 13:1-23, especially verse 22). To avoid this pull, we have to intentionally guard against it, choosing over and over again to serve God rather than money.

Biblical Stewardship Reflects Spiritual Reality

All these people were still living by faith when they died. They did not receive the things promised; they only saw them and welcomed them from a distance, admitting that they were foreigners and strangers on earth.

Hebrews 11:13

Another reason why the world’s definition of financial freedom doesn’t work is that it’s based on a false assumption. That assumption is that the world we see is the only world that is, and it’s our home. Nothing could be further from the truth.

The Bible reflects the truth – we’re aliens and strangers on earth (1 Peter 2:11; Hebrews 11:13- 16; John 14:1-3). Everything we “own” here is temporary – another truth that the rich fool in Jesus’ parable did not recognize. Therefore, there is no real freedom in wealth itself; the freedom comes in stewarding that wealth in light of eternity.

Biblical Stewardship Results in Spiritual Growth

“Do not store up for yourselves treasures on earth, where moths and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”

Matthew 6:19-21

Our hearts follow our treasures. Again, this is not a prohibition against acquiring wealth; it’s a warning about making that wealth our treasure. Wealth used for kingdom purposes isn’t earthly treasure – it’s heavenly treasure. It’s no accident that Jesus followed these statements about treasure with the famous passage about seeking first God’s kingdom (Matthew 6:33). Storing up treasures on earth fosters worry about worldly concerns like having enough food and clothing. Storing our treasures in heaven enables us to trust God as our provider, freeing us from worldly worry.

Worldly wealth can easily become one of the “hindrances” that keeps us from running the race that God has marked out for us (Hebrews 12:1-3). Achan fell prey to the lure of worldly wealth and disobeyed God’s command, at the cost of his life and his family’s lives (Joshua 7). Ananias and Sapphira made the same mistake, keeping back wealth while representing themselves as being generous – and suffered the same fate as Achan (Acts 5:1-10).

Focusing on worldly wealth conforms us to the world, because that’s what the world strives for. But as believers, we’re called not to conform to the world but to be transformed by the renewing of our mind (Romans 12:1-2). How does this transformation take place? By fixing our hearts and minds on things above, not on earthly things (Colossians 3:1-2). And how do we fix our hearts and minds on things above? We put our treasures there.

The world’s concept of financial freedom leads us away from all these Biblical priorities. But Biblical stewardship leads us toward transformation, toward hearts and minds focused on God. If we want to become more devoted to God, Biblical stewardship leads us in that direction.

Choices of the Biblical Steward

True financial freedom comes only through Biblical stewardship. And the great part is, this freedom doesn’t depend on how much we’ve saved up! Instead, it depends on putting into practice wise Biblical principles. It depends on making God-honoring choices with the way we manage the resources he’s entrusted to us. The Biblical steward makes several important and related choices. Such a person is saying, in effect:

• I choose to serve God, rather than money.
• I choose to pursue God’s purposes, rather than my own.
• I choose to live as a stranger on earth, recognizing that this is not my real home.
• I choose contentment over covetousness.
• I choose to focus on things above rather than on earthly things.

Only in Christ is there true freedom. And only in Biblical stewardship is there true financial freedom.

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