How Financially Literate Are You, Really?

Hi, again, listeners! I’m your host, Wanda Thibodeaux, and you’ve tuned in to Faithful on the Clock, the podcast where all our blood, sweat, and tears are devoted to getting work and faith aligned. On this episode, we’re talking about financial literacy, because the ability to understand and manage money has such a direct influence on both personal and business stability. Fortunately, it’s not gonna cost you one pretty penny to keep listening, so let’s get to it.

So I got inspired to do this episode because I kept seeing headlines all over the place about inflation and gas prices and all that, you know, stories about how the pandemic has really challenged people to make ends meet. Companies are dealing with things like loans and calls for wage increases, and one day, I seriously, I was like, I was in my car, driving home from getting groceries, and the thought just hit me in the face that there’s just no way…it’s like a perfect money storm, right? And the only way that storm isn’t gonna blow you or your business away is if you really understand what to do financially with the little money you’ve got.

And so then of course I got curious and I went and looked up a little more information on what the situation is like. And I stumbled on this nicely sourced article from Guardian Life, and they point out that, for the past five years–not just for the past year, but for five years in a row–Americans only answered about half of the P-Fin Index questions properly. And the P-Fin, that’s just an index that measures how much people know about money. So 1 out of 5 people could only answer 25 percent of the P-Fin questions. And then half of people who are stressed about their finances say it DOES distract them from their work, and people who are stressed financially are more likely to go look at other companies as a solution. You know, it’s a heck of a lot easier to be engaged on the job and connect with your team if you’re not worried about whether your rent check is gonna bounce or somebody’s cheating you or any of that. And then, for employers, let’s say you’re an employer and you offer different retirement options. Well, are you really doing your workers any good if they don’t even know how those options could influence them in the long term? Or maybe you take on too much debt too fast, or you don’t know how to look for hidden costs in things that you’re trying to buy for the business. So there’s this real connection between control of money and being able to ethically provide a good environment, or from the worker side, being able to feel secure enough that you want to stick around and can focus on really making an impact with the work that you’re doing.

Now, there are a handful of big signs that you need to step up your game and learn a few things, OK? And the first is, you don’t have a budget or you don’t know the amount of money coming in versus what’s going out. And that includes knowing your credit card balances. Two, not knowing your credit score. That’s a big deal because it ties to being able to apply for loans and get good interest rates. Three, you don’t know how inflation and income connect. Four, you can’t work with compound interest. Five, you’ve constantly got money going into extra fees, you know, things like overdraft charges and whatnot. Six, all of your investing is in one area. You’re not dividing where you put your money to reduce your risks. Seven, you’re not saving at all. Eight, you don’t research before you spend or invest. And then the last one I’ll tack on, number nine, you don’t know what funding is available or how to get assistance.

Again, this is just a really quick list. I mean, there are other areas now, like cryptocurrency, identity theft online. It’s constantly evolving, so financial literacy, it’s gonna keep changing, too. And there are a ton of financial literacy tests you can take online to kind of self-assess yourself more in depth and say, “How financially literate am I, really?” But the bottom line is, you should feel comfortable engaging in everyday transactions, and you should feel like you’re informed about your options. If you can get to that point, then you’re probably financially literate enough to take good steps toward a solid future. There’s always something to learn, but if you’re out there, you know, you’re constantly saying, “I didn’t know that”, or you feel stressed or caught off guard, that should be a big red flag you’ve got some work to do.

All this said, I am a firm believer that solving a problem takes everybody involved. So employees, you’ve gotta be willing to ask your employer for things like financial literacy training. You’ve gotta communicate that you don’t understand your direct deposit process or whatever it is. And employers, you have to be aware of your team’s demographics and listen to what they’re telling you. You’ve gotta be willing not just to put resources out there, but to give people all kinds of ways to access those resources and to make sure people actually know they’re available. We talk a lot about feedback loops in business, and that definitely can be beneficial in both directions here.

Now, let’s say your not as financially literate as you’d like. It’s OK if you’re not, I’m not. We all can learn. Does the Bible offer any tips on how to work smarter with your money? Oh, I’m so glad you asked, because it absolutely does. I’m gonna borrow a few that Amy Livingston points out on Money Crashers. But these tips, they apply to everybody, from the janitor to the CEO, one person or the whole company, so it’s good stuff.

The first verse I’ll give you from Livingston’s list is Proverbs 24:27, which says, “Put your outdoor work in order and get your fields ready. After that, build your house.” And the idea is that, you know, for the farmer, the field, that’s their means. That’s how they get their money and make a living. So if they don’t put that field first, they’re not gonna be able to do anything else, right? So make sure you know what your priorities are. What’s most important for you to lay down first that will make all the other money pieces fall into place? Tackle that first and you’ll have an easier time.

Secondly, take Luke 14:28-30. That essentially says you don’t build something before you calculate the cost. So this verse, it ties to budgeting, which I mentioned earlier. Setting a budget, figuring out costs and what you’re gonna spend, that’s what’s gonna ensure you don’t get halfway and have to quit. So don’t just wing it and hope for the best, you know, you swipe your card, you don’t even know what your bank balance is–I’ve seen so many people do that. Really figure out what you wanna do, make your budget around those goals, and stick to it. Track what you’re doing, it’ll help.

Third, build an emergency fund. Your verse there is Genesis 41:34-36, where there’s direction for Pharoah to collect food in preparation for the famine they knew was coming. This one, I know it’s so hard for a lot of people, not only because incomes don’t leave a lot after expenses, but also because we tend to have so much optimism bias. You know, we think the bad stuff won’t happen to us, so we assume we don’t have to protect ourselves. But if you have that emergency fund, then if trouble hits, you’re gonna be able to weather it without getting thrown off course from what you’re trying to achieve.

Four, avoid debt. Proverbs 22:7 says “The rich rule over the poor, and the borrower is slave to the lender.” And I don’t want you to think about this slavery in terms of just physical labor, OK? I know a lot of you will think of it that way, you know, you’ll kind of think back to the Bible times and think maybe it doesn’t apply anymore. But I want you think of it in terms of mental slavery, too. Because if you have debt, even what you might consider quote good debt like borrowing for an investment, you’re constantly thinking about how to pay it back, right? You’re always worried about making payments on time or losing your collateral. So for your own mental freedom, for your happiness, don’t take on debt unless you have to, and if you have to, make sure you have a clear repayment plan.

Then the last point I want to elaborate on from Livingston’s list is to diversify your investments. Ecclesiastes 11:2 says, “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land. So even in Biblical times, you know, people recognized that, barring God telling them what would happen, they had no way of predicting what they were going to run into. And they realized that if they diversified, that reduced risk, because if one investment went south, they wouldn’t lose everything. That absolutely holds true today. And the thing is now, I think we have more options than ever on this. You know, you can do microinvesting, you can do real estate, you can do whatever. So find what you’re interested in and want to support with your assets and just go for it.

Now to just kind of wrap up, I’ll just say, you can be pretty financially literate and still need a hand now and then in some spots. Like for me, taxes is one area I still need to learn about. But you can get people to help you, take advantage of financial advisors, that kind of thing. Don’t be embarrassed to seek those people out and tap their expertise, because it’s gonna put you on better ground if you do. Especially as your wealth increases, your business gets bigger, things get more complex and there’s more on the line, so you’re gonna want to make sure those people are around to get all the I’s dotted and the T’s crossed.

So let me just say a prayer for you and we’ll get back to the swing of things.

God, I know that money can be such a source of stress and strife. And I don’t want anybody to fight because of money. I don’t want anybody to feel the anxiety that comes from financial uncertainty. So, Lord, I ask that you erase whatever shame or embarrassment might stop people from getting help with it. Encourage us every day to be clear about our goals are and what we need or don’t understand, so that in the end, we’re on solid financial ground to do work for you, both individually and as teams. In Jesus’ name, I pray, Amen.

Whew! Little bit longer episode today, but I think we covered a lot of ground in a relatively short amount of time. Hopefully you agree with me there. Next week, I’m discussing imposter syndrome. What’s at the root of it, and how can you convince yourself you belong right where you are? If you enjoy the show, go ahead and join our email list–all you gotta do is go to faithfulontheclock.captivate.fm, scroll down and you’ll see the sign-up. That’s gonna let me connect with you and give you all kinds of updates. I’m looking forward to seeing you on that list, and until next time, be blessed.