Are You a Prudent Spender?

Spending. We all do it.

If we’re honest, many of us spend too much. Sometimes we wonder why we bought that thing that we were so sure we needed but now have no use for. We feel guilty over hasty spending decisions. Other times, we justify overspending on the grounds that “we deserve it.” 

On the other hand, some of us minimize spending to the point that life becomes a drudgery. Convinced that we don’t have enough money saved, we avoid any discretionary spending in order to put still more money aside.

Somewhere in the middle are the Prudent Spenders.

As faithful stewards, we want to spend responsibly and to be grateful for God’s provision of resources that bring us enjoyment. But how can we tell if we’re on the right track? What are the indicators of whether or not we are acting as Prudent Spenders?

It’s Not About the Budget

The amount of money we spend each month isn’t an indication of whether we’re spending wisely or foolishly. If we spend beyond our income, that’s a problem at any level of income and spending. But a list of expenses alone isn’t enough to gauge whether we’re prudent spenders.

One family eschews TV and chooses other forms of entertainment, so they have no cable or streaming expense. Another family chooses to spend time together watching specific TV programs. Which family are prudent spenders? We can’t tell from just the cable bill.

It’s not about the size of our house or cost of our mortgage. It’s not about the age of the car we drive or the amount of our payments. Numbers matter, but they don’t tell the whole story.

Similarly, prudent spending is not about budgeting and restricting our spending down to just the bare necessities. Rather, it’s about spending intentionally with regard to where we spend and how much. Prudent spenders live within their means and understand their priorities – and their spending reflects those priorities.

How can we gauge whether we’re overspending, underspending, or spending wisely? With yet another nod to Jeff Foxworthy…

You Might Be an Overspender if…

• You’re given to impulse buying. You often buy things online or in a store that you weren’t really shopping for and had not planned in advance to buy. You find yourself asking, “What was I thinking?”
• You spend a lot of time shopping. Whether online or in stores, you enjoy shopping and spend a significant amount of time on it. Sometimes you’re shopping for something specific, but often you’re just shopping.
• You don’t know how much you’re spending. You’re often surprised at your credit card balances because you don’t track your spending. If you don’t track it, you’re probably spending more than you realize!
• Your credit card balances are increasing. Similarly, your credit card balances increase from month to month. This means that you’re spending more than you’re paying off each month and is likely a result of outspending your income.
• You accumulate possessions and need extra storage space. Your possessions continue to build up, to the point that you don’t have enough room for them in your house. You’re experiencing the “bigger barns syndrome” (Luke 12).
• You don’t have enough money for important things. This often goes with impulse buying. Because you’ve already spent the money, it’s not available when an important need comes up. Often, you spend anyway (because, well, this is important…) and the credit card balances continue to increase.
• You feel a constant need to “upgrade”. Whether technology, cars, clothes, or anything else – it’s important to you to have the latest and greatest. Maybe instead of paying off a car and driving it for a while, you consistently trade it in on a newer one – and the car payments keep coming.
• You have difficulty saving and giving. You want to be generous and to save wisely, but there never seems to be enough money left for either of these.
• You feel embarrassed about your spending. You don’t want to talk to others about your spending because you’re embarrassed over how much you spend. You shy away from any financial discussions with others.
• You think of yourself as an owner. You see yourself as the owner of your resources and in charge of all decisions related to finances. You don’t have a sense of accountability to God for what he has provided.

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You Might Be an Underspender if…

• You feel guilty when you spend. Anytime you spend money on anything beyond the essentials, you feel a pang of guilt. Sometimes you feel it even when spending on essentials. Your ideal month is one in which you spend nothing beyond your monthly bills.
• You feel compelled to save. Feelings of insecurity drive you to save compulsively and to forego spending in order to save more.
• You rarely do anything for enjoyment. You consistently turn down invitations to movies, events, dinners, or anything that would cost money. You think of entertainment as a waste of money.
• You celebrate being “under budget”. When you spend less than you had planned in a month, you always consider that a victory, regardless of what you might have missed out on during the month.
• You feel proud about your spending.  You spend less than your peers do on almost everything, and you enjoy comparing notes. Financial discussions bring a sense of pride.
• You think of yourself as an owner. Yes, this one was in the last list as well. But “playing the owner” has two sides – one side leads to materialistic spending and the other to over-saving.

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You’re Probably a Prudent Spender if…

• Your spending reflects your priorities. You know what’s important to you and your spending plan is built around these priorities. Your spending is intentional, not impulsive.
• You have a balanced spending plan. You plan your spending in advance and you know you have enough money because your spending plan balances; that is, your expenses don’t exceed your income.
• You balance spending with saving and giving. Your balanced spending plan includes significant saving and giving as well as lifestyle spending.
• You track your spending. You not only have a balanced spending plan, you track to the plan so you know when you’ve spent more or less than you planned, and you’re able to adjust accordingly.
• You are accountable for your spending. Minimally, you plan, execute, and review spending with your spouse if you’re married. Optimally, you have at least one close, trusted friend with whom you regularly discuss your finances at some detail.
• You think of yourself as a steward. You see God as the owner of all the resources in your care, and you sense an accountability to him to use them wisely.
• You pray over your finances. And not just for more money! You consistently seek God’s wisdom in major financial decisions. You express gratitude to God for his provision and confess any tendencies toward materialism or toward trusting in money for security.

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Becoming a Prudent Spender

Becoming a prudent spender starts with understanding God’s ownership and our stewardship. This means that we live – and spend – to please God first and foremost, not to please ourselves. That’s not to say that we shouldn’t ever spend for enjoyment – God intends for us to enjoy his good gifts (James 1:17; 1 Timothy 6:17) in a spirit of gratitude. But it is to say that we take the time to understand God’s purposes (in general) and his purposes for us (specifically) and that our spending aligns with these purposes.

Prudent spenders consistently display three important traits: awareness, intentionality, and contentment.

Become Aware

Prudent spenders are aware of their spending. This means primarily two things: they know where they are spending and they understand why they spend as they do.

We can’t control what we don’t track, so tracking our spending is the first step toward awareness. Think of it this way – if the Owner of the resources were to ask one day what we’ve done with his resources (as the Parable of the Talents implies that he will – Matthew 25), will we be able to answer? If we can’t explain how we used those resources, we’re not acting as stewards – we’re acting as owners, with no accountability to anyone other than ourselves.

Once we know where our money is going, we can then work to understand why it’s going there. This can lead us deeper into an understanding of our own priorities. Say $2,000 a month goes to our mortgage. Understanding that, we can then work to figure out why we’re spending that amount, and whether it’s too much or too little. Are we overspending because we like the neighborhood or having a big house is important? Have we run out of space but don’t think we have enough money for a house that would meet our needs?

There are many factors that influence why we spend the way we do. A few of them include:

• Money motivations. Do we spend to express freedom? Do we use money to gain power? Do we hold back on spending because we think of money as our security? Do we spend because we want others to love us or as an expression of love for others? Understanding our money motivations gives us a big clue as to why we spend.
• Emotions. Often, our spending is emotional. We feel insignificant, so we buy something that makes us feel more important. We feel like we don’t fit in, so we buy something that fits with the way others dress, or what they drive, etc. Sometimes our families of origin have deep impact on the emotions we associate with spending.
• Marketing tactics. Others influence the way we spend. There’s an entire industry whose job it is to exercise that influence, and they are masters at understanding and taking advantage of emotions, situations, etc. If we understand these tactics, we can see some of what’s behind the ways we might feel about a particular purchase.

Become Intentional

Once we know where we spend and why, we can then move into intentionality in spending. Instead of letting emotions and other factors drive us, we begin to take control, make spending decisions, and then execute those decisions. We can break down the process of becoming more intentional about our spending into three key steps.

1. Know Your Why

It’s possible to have a balanced spending plan and to stick to it but still not be spending intentionally. An effective spending plan isn’t just balanced – it’s a reflection of our key priorities. Mapping out our priorities and non-negotiables is the first step to intentionality in our spending. Do we have requirements for the type of neighborhood or the size of house we want? Those will determine how much we need to spend on housing. Is having one spouse at home important? That will help us gauge how much income we can plan on.

By the way, if you have a family, this needs to be a family exercise!! This doesn’t mean that parents abdicate decision-making authority, but it’s important to understand everyone’s priorities. Maybe your children don’t care so much about a pile of Christmas gifts as they do about a fun family trip. Understanding the whole family’s priorities forms the basis for agreement on spending.

2. Plan your what

Once we understand our priorities, the next step is to create a spending plan that reflects those priorities. Of course, the plan needs to be balanced. But for it to be truly effective, it needs to reflect what’s important to us.

One popular framework for spending plans is the 10-10-80 structure. In this plan, the first ten percent of gross income goes to giving, the next ten percent to saving, and the remaining 80% to lifestyle (including taxes, etc.). This plan prioritizes giving and saving – the two things that we tend to do last and only if there’s enough left over. This framework may not be immediately achievable in all circumstances, but it’s a good guideline for keeping spending in balance..

3. Execute your how

Once you have a plan in place, then what? How do you make that plan work, and how do you make it as effective as it can be?

In the short term, the first step is to track spending. A plan is only valuable if we’re actually tracking what we spend to determine if we’re meeting the plan and if it’s working. Are we overspending in some categories? Underspending in others? Is our understanding of our income and expenses accurate? We can only know if we’re tracking our spending and comparing it to our plan.

As we mentioned before, it’s possible for a plan to be balanced but not effective. Tracking spending against our plan isn’t just a matter of making sure the numbers balance. It’s also a process of understanding how we feel about how we did. Perhaps we overspent the plan this month because an unexpected emergency came up. But if we had emergency savings to use, we don’t need to feel bad about not meeting the plan. Or maybe we did meet the plan but we were miserable all month because we didn’t spend anything on entertainment. Do our priorities need an update and do we need to alter the plan accordingly?

Adjusting our spending plan requires that we be able to make good trade-offs. Of course, we can only do this in the context of a clear understanding of our priorities. But if we have a balanced spending plan, then picking up something by definition means putting something else down.

Longer-term, a key objective is to establish a lifestyle cap. This is where we analyze what our preferred lifestyle looks like (based on our priorities and non-negotiables), determine what that lifestyle costs, and cap our spending there. Beyond that, extra income can be set aside for giving and saving. This keeps us from continually gobbling up all we make (Proverbs 21:20) and helps us create margin and grow in generosity.

Become Content

Prudent spenders consistently spend with awareness and intentionality. But it’s possible to be aware of what we’re spending and to intentionally spend according to our priorities and still not be a prudent spender. That’s because it’s possible to have the wrong priorities.

Remember the definition above? Prudent spenders guard against materialism. They don’t over-accumulate money or possessions. Prudent spenders are content.

Then he said to them, “Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions.”

— Luke 12:15

Jesus warned us to guard against greed, since possessions don’t define our lives. Paul equated greed with idolatry (Ephesians 5:5; Colossians 3:5). Greed can keep us from pursuing God, as we see in the case of the rich young ruler (Matthew 19:16-23).

The antidote to greed is contentment. Paul learned the secret of contentment regardless of circumstances (Philippians 4:11-13) and Scripture encourages us to do the same. If we see God as the owner of all that we have, it becomes easier to be content with what he has provided. This doesn’t mean, of course, that we never seek a higher-paying job or that we never increase our lifestyle. But it does mean that these considerations don’t dominate our priorities.

Our culture encourages discontentment. Marketing exists to make us dissatisfied and to convince us that happiness is only a purchase away. With such a powerful stream of messaging encouraging materialism, how is it possible to achieve and maintain contentment? The same way Paul did – “through him who gives me strength” (Philippians 4:13). We often think of this verse as an “overcoming” verse, but in context, it’s actually about contentment, not achievement.

Keep your lives free from the love of money and be content with what you have, because God has said,

“Never will I leave you;
    never will I forsake you.”

— Hebrews 13:5

We remain content through focusing our hearts and minds on things above, not on earthly things (Colossians 3:1-2). As we do that, we realize that God has promised never to forsake us. This enables us to put our security in God rather than in money and possessions.

So we prayerfully seek God’s priorities for our finances and possessions; we recognize his ownership and our stewardship; and we express gratitude to God for all he has provided. He not only meets our needs but brings us a sense of contentment with his provision. In this context, growing as a prudent spender becomes a natural part of faithful stewardship.

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