Beyond Wesley: A revised financial framework (Part 2)
Important disclaimer: While this post discusses asset accumulation, I want to be very clear that I do not support the so-called “prosperity gospel”.
My last post explored John Wesley’s primary sermon on the use of money. His famous mandate is to “gain all you can, save all you can, give all you can.”
It’s a bold sermon with a radical message. Wesley was a very frugal man who was extreme in his call for self-denial to facilitate generosity. We would do well to marinate in his challenge.
But I ultimately find his financial framework incomplete and insufficient for the modern theoconomist. In this post I will propose an updated framework that makes 2 revisions and corrects 3 omissions.
Revision #1: Give generously (first)
Honor the Lord with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine (Proverbs 3:9-10).
The third and final prong of Wesley’s framework is giving. I think the sequencing needs to be changed. Giving should be our first consideration after money is earned.
Proverbs 3 (quoted above) indicates that we should give the Lord the firstfruits of our crop. In Genesis 4, Abel brings God “the firstlings of his flock, their fat portions” and we learn that God “had regard for Abel and his offering.”
As pastor Joby Martin teaches, we are to give God our “first and our best”. Our God is a jealous God and we are to have no idols before him (Exodus 34:14). In all ways he demands primacy.
The classic tithing approach is a way to put this into practice. By giving the first 10% of earnings to the Kingdom, it demonstrates that God is our primary allegiance.
Revision #2: Spend smartly
Wesley’s mandate to “save all you can” is really a call to live a frugal lifestyle (i.e. he combines spending and saving together). Scripture similarly tells us that chasing fulfillment through excessive spending is a fool’s errand.
I denied myself nothing my eyes desired; I refused my heart no pleasure…Yet when I surveyed all that my hands had done and what I had toiled to achieve, everything was meaningless, a chasing after the wind; nothing was gained under the sun (Ecclesiastes 2:10-11).
After establishing the foundation that self-indulgence fails to yield satisfaction, the author of Ecclesiastes (“the Teacher”) later goes on to encourage people to enjoy life.
So I commend the enjoyment of life, because there is nothing better for a person under the sun than to eat and drink and be glad. Then joy will accompany them in their toil all the days of the life God has given them under the sun (Ecclesiastes 8:15).
Given this nuance, I prefer to separate the two concepts and consider spending and saving each individually. Money’s only use is to ultimately be spent. When done right, spending can bring joy to yourself and others (memories with family, fellowship with friends, caring for your community, etc.)
By explicitly recognizing the need to both “spend smartly” and “save aggressively”, we can help ensure a balanced perspective between the present and the future.
Omission #1: Invest wisely
Wesley seems to imply that the Christian should save so she can turn around and immediately give the money away. Outler and Heitzenrater remark in their commentary that “it is as if Wesley regarded surplus accumulation as sinful in itself.”
Really, John? Are there no big-ticket balance sheet goals that one should save toward? Retirement? Education? Automobiles? Future charitable giving?
As soon as you affirm that saving toward certain goals has merit, you have two options: 1) put your savings under your mattress or 2) invest the surplus. In the Parable of the Talents, the mattress approach is condemned:
His master replied, “You wicked, lazy servant!...You should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest” (Matthew 25:26-27).
But let’s go deeper. Is there scriptural support for accumulation? Or should all savings immediately be given away? Let’s contend with a few biblical texts.
The Rich Fool
Jesus tells the crowd a parable about a rich man who has a windfall harvest and runs out of room to store his crops. Needing a solution to his (nice to have) problem, the rich man proclaims:
“This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain. And I’ll say to myself, ‘You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry’” (Luke 12:18-19).
God disapproves and the rich fool dies that night.
I’ll be honest, this parable gives me pause every time I read it. After all, isn’t this the retirement vison for many?
My take: The man’s sin is that he forgot that he was a steward of resources ultimately owned by God. The man desired a selfish life of extravagance. There is no mention of using his time, talent, or resources to help others or glorify God.
It’s a cautionary tale. Christians must never conclude that “the rest is mine and I can do whatever I want with it.”
Abraham
To counter the ‘rich fool’, let’s consider Abraham. The biblical record holds Abraham in exceptional regard as the quintessential example of faithfulness (e.g. Romans 4, Hebrews 11).
We also know that Abraham was a very wealthy man: “Now [Abraham] was very rich in livestock, in silver, and in gold” (Genesis 13:2; see also 24:35).
While both Abraham and the rich fool accumulated assets and became wealthy, Abraham is considered the father of the faith, and the rich fool was struck dead. How is Abraham different?
He obeyed God. At the ripe age of 75, God calls Abraham to leave his homeland, his family, and everything he knows to “go to the land that I will show you.” And Abraham went. (Genesis 12:1)
He put others first. Despite holding superior standing, Abraham gave his nephew Lot first pick of which portion of the land to inhabit. Not surprisingly, Lot took the superior terrain. (Genesis 13)
He generously tithed. After rescuing Lot and others from captivity, Abraham has a strange encounter with King Melchizedek of Salem who is described as a “priest of God Most High.” Abraham immediately gave him 10% of the spoils from his conquest. (Genesis 14:17-24)
He advocates for the righteous. God becomes outraged at the sin of Sodom and Gomorrah. Abraham engages in a long negotiation where he petitions God not to destroy the cities for the sake of righteous people that might be there. (Genesis 18:16-33)
He was willing to give up everything. God makes it clear that his promise (immeasurable descendants) will be fulfilled through Isaac. But then, in a bizarre twist, God asks Abraham to sacrifice this very son. Would Abraham try to take things into his own hands again (e.g. the Ishmael debacle)? He does not. He has learned. He obeys God even when it makes no sense. God spares Isaac’s life after seeing that Abraham is willing to give up the one thing that meant more to him than anything else. (Genesis 22)
Abraham was wealthy, but it wasn’t the primary narrative of his life. His life was about obedience to the Lord. This stands in stark contrast to the rich fool.
Thus, if there is a place for saving and accumulation in the context of a faithful, obedient life – then the Christian must also consider how to “invest wisely” before the time comes for the assets to be used.
Omission #2: Optimize taxes
In his letter to the Romans, Paul tells the church that they should pay “taxes to whom taxes are due” (Romans 13:6-7). Paul’s focus is on “what is due” – he does not call for us to overpay our tax bill.
In the 1935 case of Gregory v. Helvering, Judge Learned Hand explained in his ruling that while shady tax avoidance is wrong, tax optimization is not.
“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.”
-Judge Learned Hand
For many people, taxes represent one of the largest expenditures in their budget. When analyzing how to save money, starting with your largest expenses makes obvious sense.
However, my favorite business school professor was quick to point out that minimizing taxes is not the right goal - after all, an easy way to pay zero taxes is to make zero money! A better financial goal is to maximize your after-tax earnings/assets.
Tax optimization can be applied across the financial spectrum (e.g. earning, giving, saving, investing). But it is often complicated and confusing. As personal finance expert Allan Roth, often says, “Investing is easy. Taxes are not.” Strategic tax planning and optimization can therefore be a source of significant value creation.
Wesley’s omission of tax planning is palpable, but I think he would appreciate the endeavor. The underlying goal of tax optimization is primarily about efficiency, which is consistent with Wesley’s frugal approach. We want to make every dollar count.
Omission #3: Manage risk
Another relevant area of the financial life is risk management.
One aspect of this is insurance. The Bible, to my knowledge, doesn’t speak to the concept of insurance. However, a thoughtful Christian cannot ignore having the right protections in place to guard against high-cost, adverse events.
Within the investment realm, there are the important concepts of diversification and asset allocation. Finance people are always talking about how to maximize return per unit of risk.
Risk management is less sexy - perhaps that’s why Wesley doesn’t comment on it!
Conclusion: A revised financial framework
Putting this together, my revised financial framework has 7 components.
My revised financial framework
This is too complex for a sermon, but I believe it to be a better, more comprehensive guide as we think about a faithful financial journey.