February 5, 2021

Stewardship Scenarios: Treading Water

According to a Forbes article from a couple of years ago, as many as 78% of American workers live paycheck to paycheck. (1)  Some of these folks fit into our previous category of being in crisis mode. But  many of them are actually making ends meet month to month.  They’re treading water financially.

Are they Financially Free?

People in this situation are not OK financially – but they don’t realize it.  They’re paying their monthly bills, mostly on time, and they’re making minimum payments on their credit cards – maybe even a little more than minimum.  They’re not financially free, but they assume their lifestyle is “normal” – and in fact, they are normal compared to others around them.

People in this scenario need clarity.  They need to understand the dangers of living paycheck-to-paycheck and to put in place a plan to begin making some financial progress.

What are the Financial Indicators?

These folks typically have a neutral or slightly positive cash flow, meaning that they make enough to meet all their obligations month-to-month.  Often, they have significant consumer debt but they’re able to keep up with the payments. At the same time, they’re not making any real progress on paying down their debt (and may not see that as a need).

They have some net worth – meaning they own more than they owe – but it’s not what it should be at their stage of life, primarily due to taking on debt for depreciating assets (such as furniture, cars, etc.). Their credit score is probably average – they have a somewhat high revolving credit usage but they don’t miss payments and they make their payments on time.

One or two missed paychecks would put these folks under water. They have little or no emergency savings, and tend to use credit cards to cover unexpected expenses. They may have some retirement savings, but it’s not likely a high priority.  In terms of giving, they may be giving somewhat regularly but they are not likely tithing.

What do they need?

The key spiritual need in this situation is contentment. Most people are in this circumstance because they’ve allowed their lifestyle to creep up and up in parallel to their income over time. Raises and bonuses tend to go to lifestyle increases rather than building margin or tithing.

People who are treading water financially need accountability. Whether that’s accountability to others in their community or simply to a financial plan, they need some objective input and some regular measurement against that input to get them on track and keep them on track.

What’s next?

The key realization for these folks is that much of their spending is likely an attempt to meet an emotional need – a need to feel good about themselves, to feel that they fit in, that they’re worthy, etc. Understanding the emotions behind their spending can provide a safeguard against the impulse buying that often characterizes their finances.

The key decision here is to create financial margin by doing two things: setting aside meaningful emergency savings, and getting serious about retiring their consumer debt.  Creating this margin will help keep people who are treading water from going under when an emergency hits (and it will).

The key first step is to create a Spending Plan and get intentional about planning and tracking finances. This plan should prioritize creation of a viable emergency savings fund and then accelerating debt repayment. Discretionary expenses, such as entertainment, should be brought in line with these key priorities.

A key longer-term consideration is a lifestyle cap – the lifestyle at which an individual or family is content.  Coming to grips prayerfully with a lifestyle cap is a key deterrent to the lifestyle creep we mentioned earlier. Once that lifestyle is met, additional income no longer goes to lifestyle – it’s freed up for giving and savings.

With regard to giving, people in this situation need to be challenged to take a next step.  If they’re not giving regularly, that should be part of their Spending Plan. If they are giving regularly but not yet at the tithe, they should be prayerfully moving toward the tithe.

What does success look like?

Success for people who are treading water financially is primarily a matter of intentionality with their finances.  Creating and sticking to a Spending Plan – and modifying it along the way as needed – is a key achievement.  Ideally, this would look something like the 10-10-80 plan: 10% of income for giving, 10% for savings, and 80% for lifestyle.

As implied above, a second key success factor is getting to the tithe with giving.  For most people in this situation, giving 10% of income is going to mean something of a sacrifice – not that basic needs can’t be met, but it’s going to cost in terms of entertainment money, vacations, or other areas where the natural tendency is to spend on lifestyle. Developing an attitude of joyful sacrifice is a major win.

A stewardship ministry that can develop people in intentionality and generosity disciples them effectively in this key area of spiritual growth.


(1) https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/?sh=e169fff4f10b, accessed on Feb. 3, 2021.