Young adults and their money
Transitioning from youth to adulthood is perhaps the most significant change in life. Young adults are faced with new issues and needs, both sociologically, spiritually, psychologically, and physiologically. They are looking for independence or breaking away from child roles in the family.
All of these are tied to their ongoing faith development and relationship with God. Some new ideas they get from the media and people they meet in college or the workplace will probably be very different from what they were taught or experienced as children and teens. These new ideas and values may come into conflict with their current belief system. No wonder the church dropout rate for young adults is so high!
Among their challenges is stewardship. Simply put, stewardship begins with recognizing and internalizing God’s ownership of who we are and what we have. It includes, but is not limited to, material possessions, health, gifts, talents, time, family, and oneself (Ephesians 2:10).
Most high school and university graduates have little working knowledge of finances. They’ve grown up in a protective environment, and in an era of unprecedented economic prosperity and consumerism. Businesses have developed sophisticated marketing techniques targeting youth and young adults.
While nearly every church has occasional sermons on giving, few youth leaders spend time teaching young people real money values. Worse, some grownups model irresponsible money habits at home. Unless we make concerted efforts to pass on wise and godly money values, we run the risk of fighting a lopsided battle for their moral and spiritual health.
Seven items top my list when speaking to youth about money, but I’ll give you the first three here to start out (the other four will appear next month):
1. Establish financial objectives, and put your faith and trust in God.
Living without objectives is akin to steering a ship without a rudder. You’ll never know when you reach the destination nor will you know how to get there. Well-defined goals provide both direction and motivation. These can take the form of making a down-payment on a house, saving for a mission trip, or planning for early retirement.
It’s imperative to reassess your goals on a frequent basis, since they change. The beginning point of goal setting is spending time with God. Psalm 37:4 says, “Take delight in the Lord and he will give you the desires of your heart.” Your daily walk with God will allow him to bring to the surface the desires he would have you to focus on.
2. Understand that money grows with time, not on trees.
There’s no such thing as getting rich quick. Financial independence is a long-term process, built on faith and self-discipline. One of the least understood concepts is the impact of compounding interest over time. For example, if you reduce that daily $5 cappucino or bagel at Tim Hortons or Starbucks and invest instead in a monthly RRSP for your working lifetime of forty years, you could turn that saving into a whopping $839,191 at a return of 10 percent compounded annually, or $486,271 at a return of 8 percent compounded annually.
I strongly encourage young people to try out the free compound interest calculators online. You will be amazed at the impact you can make on your financial plans with a more disciplined approach to spending and saving.
3. Use a budget and keep a record of your spending.
A budget is a short-term spending plan that includes cash from all sources and then pre-allocates that income. The exercise of preparing a budget, while seen by most young people as a rigid constraint, is more important than controlling the budget itself. It forces you to make decisions and set priorities. Rather than creating rigidity, a budget brings freedom. It lessens confusion, fear, and frustration of what and how much to spend.
Equally important is tracking your spending in detail by budget categories (e.g. giving, tithing, entertainment, food, clothing, phone/Internet, equipment purchases, sports and recreation, vacation). Recording your spending and comparing it against your budget regularly will heighten awareness of any financial gaps, allowing you to get a better grip on your spending patterns and take corrective actions where necessary.
Being a good money steward transcends self-discipline and faith – we must always be thankful and content. As Deuteronomy 8:18 teaches us, “But remember the Lord your God, for it is he who gives you the ability to produce wealth.” And 1 Timothy 6:6 says “But godliness with contentment is great gain.”