Financial author David Bach has been popping up
everywhere. From Business Week to Glamour,
from CNN to Oprah, Bach has been telling
America how to, using his well-known catch phrase, “finish rich.”
In fact, “finish rich” is his mantra, the title of his website and in
the title of most of his books.
Finishing rich doesn’t sound too bad. A lot better to most of
us than finishing poor. So, I wondered. What is his advice and, as
a Christian, should I follow it? A few mouse clicks and a few days
later, I had a copy of Bach’s most recent book, The
Automatic Millionaire.
Before even beginning it, I admit, I had some doubts. This is
no slam on Bach in particular. Let’s just call it a general leeriness
about the secular financial world. Money is seductive, as is
advice on how to make the most of it. Too often I’ve found
myself listening to a financial guru, nodding my head and
thinking, “Yeah, that could work for me!”
But there’s one big problem with that: These experts and I
are coming from completely different perspectives. The goal of
their advice, simply, is to have enough. Have enough for
retirement, or enough to feel safe, or enough to live out my
dreams, or enough to whatever. My goal as a Christian is
righteousness. Instead of having enough, I want to be right with
God. He is my provider. I am only the steward. If I don’t get that
straight, it doesn’t matter how much I’m sticking into my 401
(k).
So, I’ve learned I need to be cautious when taking financial
advice. My question can’t be “Will this work?” It has to be “Is this
what God wants me doing with His money?” As long as I keep
that straight then maybe I can pick up a few tips from the
gurus.
So that’s how I approached Bach’s book. Not looking for an
overall financial strategy — God’s already got one for me
— but looking for a few little nuggets. I found some good
tips, one thing I would take issue with, and one pleasant
surprise.
We’ll start with the good tips.
First, Bach says, you have to start saving right now, no
matter your income. You don’t have to earn more to increase
your savings, Bach insists, you simply have to spend less.
Someone earning $20,000 a year and spending $17,000 is much
better off than someone earning $500,000 and spending
$525,000.
Think you don’t have the money to save? Bach says to look
at your “latte factor” — a phrase which came from Bach’s
encounter with a seminar student who insisted she didn’t have
one nickel a day to invest for retirement.
But when Bach had “Kim” list her daily expenses, she
admitted starting each day with a $3.50 latte and $1.50 muffin.
Before even getting to work, Kim spent five dollars that —
if she had homemade coffee and a cereal bar — could be
saved. Kim’s five dollars a day, invested with a return of 10
percent, would yield her $948,611 at the end of 40 years.
Bach’s question is simple. That latte (or lunch out or bottled
water or car wash) is nice, and it’s not that you don’t deserve it,
but would you be willing to give it up to have a million dollars
for retirement?
Bach’s next step is to pay yourself first and make it
automatic.
Before you and I were born, Americans used to pay their
income taxes in one lump sum each year. Unfortunately, they
often hadn’t saved the money to pay the tax bill. The
government’s solution? Take the money automatically from our
checks.
“Think about that for a second,” Bach writes. “The
government is pretty smart. It figured out years ago that people
couldn’t budget, so it set up a system to make sure it got ‘paid
first’ … [and] it automated the process so there wouldn’t be any
slip-ups.”
Bach advises that we do the same thing — having 10
percent of our income automatically deducted from our
paycheck and put into a pretax retirement account. By doing
this, we’re taking our will power out of the equation. The
decision is made once, and we’re done. “What makes this
possible is very simple: you can’t spend what you don’t have in
your pocket,” Bach writes. “So even if you think the most you
could part with right now is just 1 percent of your gross income,
that’s okay — go ahead and get started.” Bach’s personal
experience, and mine too, is that when the money never hits
your account, you don’t miss it. It may sound trite, but it’s true.
Try it.
So far, so good. As Christians, we can definitely examine
our own “latte factors” to find money to save. Then, by saving
automatically, we’re guaranteeing we get it done.
Bach’s next recommendation, however, I have to take issue
with. It’s this: Buy a home now. Why pay rent and own nothing,
when you could put the same amount towards a mortgage and
own your home, he asks. In addition, by paying off your
mortgage early, you save thousands of dollars in interest
payments and own it debt-free even sooner.
Good points, both. But here’s the catch. Just as Bach has
seen the little things — the lattes — get in the way
of financial progress, I have seen the big thing —
specifically, a house — stand firmly in many peoples’
way.
Rather than making the mistake of non-homeownership, I
believe too many of us make the mistake of too much home
ownership. We buy homes that banks promise we can “afford,”
only to find that when life happens — babies or illnesses
or layoffs — we can’t afford them after all.
Further, instead of buying and paying off, many of us buy
then move then move again. We start our 30-year mortgages
over again and again, only to find that we’re facing retirement
with a debt-laden house and no ownership in sight.
I think Bach is right that home ownership is a good thing, as
is paying off your mortgage early. But, as Christians, we need to
be careful. If our mortgage will compete with our family’s needs
or our obligations to God, we need to wait or buy less.
Speaking of our obligations to God, I found the last chapter
of The Automatic Millionaire a pleasant surprise: “Make
a Difference with Automatic Tithing.” The fact that a secular
author would even mention tithing got me giddy. “Money will
not give your life meaning,” Bach writes, “It really won’t…. With
tithing, the more you give, the better you feel.”
Bach recommends making your giving automatic as well
— just like your retirement payments. This has worked
well for me. The church takes my tithe from my checking
account each month, and I don’t have to remember or
scramble.
However, Bach’s definition of tithing and mine differ, as do
the reasons for doing it. Bach advocates giving to whatever
charity you feel comfortable with, reasoning that tithing makes
you feel great and “abundance tends to flow back to those who
give.” As a Christian, God has commanded me to tithe to Him
and while it does make me feel good, that’s not why I do it. I do
it because I love Him and I show that love through obedience.
So this chapter was a good reminder of my original
concerns. David Bach has some good ideas and reading his book
encouraged me to set some new savings goals for the coming
year. But my finances belong to God. I save for retirement
because He has commanded me to emulate the ant and store up
provisions — not to finish rich.
Like Paul, I want to finish the race having kept the faith. Can
I finish rich and still finish right? Perhaps. But, as Matthew 6:24
says, I’m going to have to choose one as my goal. I can’t serve
both.
Copyright 2006 Heather Koerner. All rights reserved.
