Financial Advice Graduates Need to Hear

It's cap-and-gown time for graduates and advice flies at them from every quarter. For many of these young people in transition, it's the first time they "get" the important connection between economics and their lives. Why? Many will soon pay their way, pay taxes, and live on a budget for the first time.

The problem is that the good advice graduates typically get isn't good enough. Budget? Of course. Save? Of course. Avoid debt? Yes. How to manage your finances, however, should be the final step in the process, not the first. What today's graduates need to hear first is why financial things work the way they do and what they want that financial knowledge to help them accomplish. Then, and only then, can they determine how to accomplish their goals.

Understanding Why

No one builds a house without a foundation, especially if they want it to stand for long and provide protection from the elements. For graduates beginning the process of financial responsibility, a foundation of economic understanding is crucial.

Like every aspect of life, economics begins with God. Build your financial foundation on this point: we are stewards of God's creation and He expects much from us. We are to be responsible with the resources He made and all that we do with them.

There is a "North Star" principle that can guide us in making financial decisions. Do our financial attitudes and actions better enable us to be stewards, or do they prevent us from doing so? If the answer is the former - that we are better stewards - then we're on the right path.

On a national level, an economic philosophy rooted in this understanding leads to greater freedom, a beneficial use of power, and national prosperity. On a personal level, it gives us purpose and allows us to find the balance between producing and accumulating for our needs while also focusing on the needs of others. The "why" we do things leads us to "what" to do.

Understanding What

It's vital to understand that this is God's creation. But it is a creation critically affected by sin, and we must not forget that. Scarcity often leads to poverty. Abuse of power flows naturally from leaving God out of the economic equation.

For Christians, we have a responsibility to bring a Kingdom perspective to economics as we pursue what we need and want. Pilots develop a flight plan before starting their engines. It keeps them on course to their destination; it informs how much fuel they need; it shows them the weather; and it lets them know when they will arrive. For Christians, deciding on the "what" is a matter of personal needs and wants in the context of being a steward of a fallen creation, as well as being a brother or sister to our fellow humans. This affects financial lifestyle choices, charitable giving philosophy, and a view of debt and risk.

As you understand why things are the way they are economically, you learn to set goals in view of that. Every personal financial choice flows from this.

How does this affect us practically? First, we need to be ambassadors of this message. How we see God and His creation affects how we live, work and govern. It is not an overstatement to say that Christians misunderstanding economics opens the door for redistributionist, totalitarian governments. We need to live a Kingdom-focused economic lifestyle not only because it protects freedoms, but because it is aligned with the underlying reality of all creation. It is personal right down to your bank account and checkbook. Set your financial goals with your role as a steward in mind, understanding the world is not perfect and that you will need to be vigilant, industrious, and, at times, sacrificial.

Understanding How

At last, we come to what most say first: How to pursue your financial goals. It applies to nations as well as individuals; it's not complex.

  • A budget is vital. Without a budget, you will spend more than you intend, you won't know where your money goes, and you won't achieve your goals.
  • Spend less than you earn. Not rocket science, I know, but this trips up most people. They get behind, then fall into a "debt trap" and get further behind.
  • Save. You need short-term savings for emergencies and major purchases. You need long-term savings to ensure you can take care of yourself throughout your life.
  • Give. Now is the time to build giving into your lifestyle, and it should be a line item in your budget. Far too many people plan to give "when I'm earning more." And then they find they never earn enough.

So, graduates, let's get to the bottom line on our finances. The "how to" is important, but if you understand the "why" and "what" of your personal economic outlook, putting the "how to" into practice becomes a whole lot easier.

Dr. R.C. Sproul Jr. has focused much of his teaching and writing ministry on worldview issues, apologetics, family matters and economics. He is a teaching fellow at Ligonier Ministries, professor and lecturer at Ligonier Academy and is the founder of Highlands Ministry. He recently released a 12-lesson series titled ECONOMICS FOR EVERYBODY (