Being The Best Steward Of Your Money
By Christopher Quah
When the Covid Pandemic came, nobody expected it to last till today. The world faces variant after variant of the virus. The virus has affected our health and daily lives and has left its mark on everyone’s financial situation. The loss of jobs and the closing of businesses have become the norm. As Christians, this situation is dire, but we can look to God to rough out these challenging times, not just as our provider, but also as our source of wisdom and guidance. From the Bible and God’s guidance, Rajen Devadason found success in being the best steward with the money which God gave him. This allowed him to become an experienced Malaysian licensed financial planner who helps people manage their money, plan their finances and prepare for retirement. Rajen is also CEO of consultancy RD WealthCreation.
Rajen explains that while money is not the most essential thing in life, it seems to be needed for anything significant, such as daily living, taking care of one’s family, and charity. The Bible talks about money over 800 times. Therefore, Christians must view money not just from a secular way, but see finance from a Christian perspective.
Rajen explains that when dealing with money, one must remember the scripture verse John 10:10 “The thief comes only to steal and kill and destroy; I have come that they may have life and have it to the full.”
This is because, just like every other aspect of a Christian’s life, the devil and the world will also target the financial aspect of our lives. This does not mean direct attacks like being robbed or losing our money in a disaster, but five beliefs that are not true, lies that may not come directly from the devil but the world. These five specific lies are:
An acceptable workload
We must know the world’s lie that an acceptable workload is 40 hours. While most of us have grown up believing in the 40-hour workweek, now is not the time for relaxing. As we recover from recession and depression, things will improve in 2022 and 2023 if we want to make sure that we go through this crisis and not just survive, but thrive. So, it is recommended that in the next couple of years, we need to consider going beyond the 40-hour standard workweek and consider working for 50-60 hours a week. The reason is that many of us have faced a loss of money during the pandemic. So, the extra work is essential for us to regain what was lost during those hard times. It is like the concept of saving in times of plenty so we can face the hard times. Just like how Joseph stored excess grain in the Bible during the seven years of plenty so he and Egypt could face the seven years of famine. Indeed, those times of famine are coming to Malaysia as we are heading toward a retirement crisis. Millions of Malaysians have withdrawn money from EPF during the past years, but they will not have money for the coming retirement years. So we must work hard to regain the money lost in the present period. Yes, it may be challenging, but it is crucial. So Rajen recommends that this means it could be even taking on a part-time job. He recommends taking two or three part-time jobs for those who have lost their primary job. Rajen reminds us to honour the Sabbath, though. He does his best not to work on Sundays. Take one workday off if possible.
“Don’t settle for a 3-5 day workweek. Consider a 6-day workweek and massively ramping up our work hours. But remember, this is only for a short season, say, from this year till the end of 2023. Hopefully, you can catch up on what was lost with hard work. With the extra jobs, and connections made with the monetary gain, then you can gear down a bit, once times of plenty come again,” Rajen says.
“Yet do things moderately. Never go on for 90 hours a week. It has been reported that people who work 100 hours a week drop dead in the workplace,” Rajen explains. After all, the body is God’s temple, and we must take care of it.
Concept of self-entitlement
The second lie is that of self-entitlement. Many of us work very hard yet do not earn as much as we would like to or feel we deserve. Yet we have this mentality of self-entitlement. This means we feel entitled to use the money however we want because we believe we deserve it. This means buying things we may not need or beyond our financial limitations to reward ourselves.
Instead of impulsively buying, we should break up the money into priorities. We are not entitled to buy things because we work very hard. Neither should we think we may borrow from the banks as much as they allow, so we can get something we cannot afford now and payback later.
The right way to approach this is to realise that we may buy these things only if we can afford to buy them with only a portion of what we earn, not everything we make. Only buy what we can afford, never with credit but with cash.
The idea of good debt
The third fallacy is that the world has this popular idea of good debt and bad debt. The definition of bad debt is a loan taken that makes you poorer month by month—for example, a loan taken to buy a car. As the price of the car drops, you become poorer, and that is bad debt. As for good debt, it is debt that you take on to make you richer. For example, buying investment properties can make you richer. However, these are fallacies, as all it takes is one crisis like the covid that can make your good debt disappear. When a tenant cannot pay rent or move away, your income that pays the debt is gone. Rajen suggested not to take on any debt if possible. Even if the loans are so cheap currently, we should not borrow as much as possible. The reason is that a loan is a loan, and you have to repay your loan. This reduces your ability for financial flexibility.
The rich go into a crisis and become richer, while the poor come out poorer is linked to debts. Only a tiny percentage of people enter a financial crisis and become more prosperous. The secret is that these people enter the crisis with no debt and have an emergency buffer fund that is well funded. When prices drop, those well prepared can take advantage of the situation and low prices as the economy recovers.
Saving money is stupid
Since current inflation is soaring, driven by central banks printing more and more money, there is a message circulating that saving money is a stupid thing to do. The reason for this is that the interest we earn from our bank savings cannot make up for the erosion of purchasing power caused by inflation. Nonetheless, as Rajen explains, “despite interest rates being very low, saving is not stupid as we may need the money in the future to spend or even invest.” We should save some of our money today for financial and emotional stability tomorrow; both forms of stability will help us make wiser decisions that hopefully reduce the likelihood of losing money in the future.
Politicians are capable and helping us out
This is another fallacy whereby people believe that the government is smart enough to care for us. The reality is that the world is overrun with politicians and the majority worry about winning the next election rather than about the next generation. We should also never trust men, but trust God, as He only can truly be trusted and be relied on.
So how do we fight these money lies propagated around the world? First is to have the humility to be open to wise, godly counsel and love others, not money. Love is a verb; it is an act, not a feeling. One can be more biblically grounded when handling money with these two values.
Rajen also teaches a clear 4-tiered cash allocation model for Christians.
Think of a funnel you pour water into, which then flows down and out, based on these four priorities:
- Tithing
- Saving and investing
- Giving
- Spending.
- Tithing
The tiers are segmented on a percentage basis. The first, top, tier is tithing. While times are challenging, paying our tithe is scriptural. It is more than just a rule, but a test of faith. We lean into our God, who loves us and provides for us as we do so.
The definition of the tithe is the first 10% of all God blesses us with.
“When tithing, 10% should be given; neither more nor less! If we give more, that excess should be recorded as other forms of giving like our love offering,” he explains.
- Saving and investing.
When it comes to saving and investing, Rajen explains that we should never put all our money in one place, such as only in the bank. Instead, we should diversify our assets. Among these is to save our assets in different geographic regions, such as different countries. Also, we should diversify based on a long-time line and diversify based on the principle of dollar-cost averaging. For example, Rajen follows the 1%-50% when it comes to savings. “For young adults just starting, start low, like 1%. Just practise the habit of saving,” Rajen said.
Rajen explains we should save, and when it overflows, we can use it to bless charitable organisations.
“Don’t fall into the trap of over-saving or over-investing; that would be hoarding — 50% is a healthy cap on our saving and investing allocation. We should also spend some money to enjoy our journey through life. Save first, and once we save enough, we can build momentum and start investing,” Rajen states.
Rajen also explains that saving is essential to build up an emergency buffer fund, where money is kept in places that can be withdrawn easily.
“Keep in a money market fund. What is important is not the return on capital, but the easy return of capital. Easily accessible money that is safe.” Rajen says. He also gave a breakdown of such a fund.
“For those who receive a salary working for a company or organisation, their emergency buffer fund or EBF should cover three to six months’ expenses. For the self-employed–six to twelve months’ expenses.” Rajen says.
Work hard to reach such a level of savings. Then you can start thinking of investing, slowly moving a percentage of earnings into investments and less into savings.
- Giving.
Rajen explains that giving is a principle found in the Bible. Give to the poor, to the needy and also to your parents. Children should make it a habit to regularly give money to their parents, even if it is only a small amount to start with. It doesn’t matter what the parents do with the money; some might save it and give it back to their children or grandchildren. Such giving by children honours their parents. This discipline also leads us to manage money better through a written budget.
- Spending
Spending should first be done on necessities.
We should only buy luxuries we can afford with cash, not by borrowing for them.
The main goal of these practices, as Rajen explains, is to achieve financial freedom.
“We achieve financial freedom when our passive income is greater than our operational expenses, plus our regular payments on our portfolio of debt. But if we have no debt, we attain Financial Freedom quicker because we just need our passive income to exceed our operational expenses,” Rajen explained in a simple formula.
This leads to the Rajen Devadason Blueprint for Financial Freedom, which Rajen constructed many years ago from five elements. His blueprint is taught in many of his webinars and workshops.
Those five elements are:
Active income—money we earn by showing up at work. We use our active income to pay for our lifestyle or operational expenses. The key to growing our active income is working harder and smarter.
Operational expenses—To reduce this, exercise delayed gratification—plan from a written budget, not a mental one. Delayed gratification boils down to giving up good things today for great things tomorrow. But delayed gratification is not denied gratification. It is deferred gratification.
Its purpose is to grant us a better life in the future.
Portfolio of debt—Work on paying off all our debts sooner rather than later.
Emergency buffer fund or EBF should be kept as safe cash in bank accounts or a Money Market fund.
Passive income — money that flows into our lives from our Portfolio of Wealth comprising yield-generating savings and investments.
Those five elements dovetail with the familiar biblical principles of patience, abstinence, generosity and putting God first. (Those who wish to ask Rajen about his blueprint may write to him at rajen@RajenDevadason.com)
When The Rajen Devadason Blueprint for Financial Freedom is put into practice, it helps us become better stewards of God’s bounty to us, His children.
About Christopher Quah
Chris Quah is a published author, journalist, creative writer, and audiobook junkie. He has been published in many publications, among them the popular culture fiction publishing house Fixi Novo in a few of their anthologies (Chronicles of KK, PJ Confidential, 2020: An Anthology).
