Wednesday, July 22, 2009

On Money (Fred Smith)

From the Breakfast with Fred e-list. Good practical reading especially in the light of the economic recession. I can identify with this post as I started married life (after exhausting most of my resources on 4 years full time study at the local seminary) with Under RM 1,000. Jennifer brought in no savings, having spent the few hundred she had on her wedding gown.

My father in law kindly agreed to take care of the traditionally required wedding dinner costs and collect the ang pows as we had no money to even book one table.

My father let me pay him RM 250 a month to use his old Daihatsu Charade until I paid up a set amount in a special interest free loan.

Our honeymoon was 2 nights at Cameon Highlands in a one bedroom apartment at Strawberry Park (courtesy of one of Jennifer's church members from her Bangsar church).

We re-started working life a couple of weeks after our wedding, and had to request an advance on my RM 1,000 salary as we would not have enough to pay our utility bills and run the car etc. Due to ministry expenses (no such thing as ministry allowance in those days), we were living on credit (i.e. alwasy just keeping up with my pay advance) for many years.

It is by the grace of God and good financial stewardship that today we have bought a small house (even if it is technically still the property of our bank) and am running two second hand cars (all paid for).

I did not seek to follow these "four principles" as I have never heard of them until today but they are pretty close to some that I have followed.... again by God's grace.


Short, Sweet, and Powerful

Fred frequently mentioned the influence of books in his life. The Bible, My Utmost for His Highest (Oswald Chambers), and The Seeking Heart (Francois Fenelon) were spiritual favorites. This week’s thought is a short commentary on one of Fred’s favorite secular books.

One of the influential books in my life is quite short. It wasn’t weighty, nor did I struggle to understand it. But it formed the basis for my thinking on financial security -----and not only that, it gave me a modus operandi. Seeing as how Mary Alice and I went from total assets of $5.00 the day we married to a comfortable living, that makes the book worthwhile in my estimation. Oh, by the way, it was Mary Alice’s $5.00. I always told her, “If you had wanted more money when we married, you should have saved more!”

What is this book? The Richest Man in Babylon by George S. Clason.

Any book, to be helpful, must come when it is needed ---- just like mentors, and sponsors. This book came just at the right time. It is actually more of a pamphlet than a book ---- only a few pages with four principles which I followed. I benefitted by following them; others found misfortune by ignoring them.

The book is a story, more of a parable. I have always thought parables were an excellent way to slip truth into the heart. Jesus used them masterfully. In this story, a man tells the secret of riches to a poor printer’s laborer in exchange for an all-night effort to produce a much-needed printing project. At first, the poor man felt cheated – the advice was so simple. However, the workman followed it and even though making some early mistakes, found the way to financial success.

Even today when I think about the four principles, I blush at their simplicity. We want life to be complex and complicated. However, when I, like the poor laborer, follow them, I find financial security.

We expect detailed plans and intricate strategies. Even in the Bible, we find the simple commands received with skepticism. For example, “Dip in the river” was sufficient. But, our egos often don’t allow us to accept simple truths.

Following truth is more rare than knowing truth.

Here are the four principles. I followed them, just as did the poor man in Babylon:

1. At least 10% of all you make is yours to keep ---- pay yourself first.

2. Never invest with an amateur – he is prey to the shrewd.

3. Reinvest the interest you earn from all you save. “Don’t eat up your grandchildren” is how Clason puts it.

4. Desire to acquire wealth through knowledge and association – gain knowledge of the ways of money and associate with those who are wisely accumulating.

I found these principles moral. They violate no one’s integrity. Desiring money is not wrong. It is honorable so long as one seeks money as a means to noble accomplishments, not to greed and self-aggrandizement.

For me, money is, and has always been, a trustworthy servant, but a tyrannical master.

This week think about: 1) What books influence my thinking? 2) How have I
developed a financial philosophy? 3) What advice would you give to a younger person about money?

Words of Wisdom: “Following truth is more rare than knowing truth.”

Wisdom from the Word: “Plans failwhen there is no counsel, but with abundant advisers they are established.” (Proverbs 15:22 NET Bible)


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  1. 3 and 4 are not simple!!!

  2. Z

    I think you are right :-) I guess it is a principle that is easy for business minded people.

    For me, I think with a wider perspective of these four points (especially 3 and 4). For example:

    1. At least 10% immediately goes to God, 10% goes to savings.

    2. I don't invest in things like the stock market. Most I have done in the past is put some money into known stable unit trusts (but no more!) And I listen to an uncle of mine who is knowledeable and trustworthy. He has helped make me a few hundred dollars many times at no risk to me. :-)Yes and it is legal money.

    3. I know it is slow but compounded interest does help so I reinvest my interest (plus wahtever little I have spare) with my principal. By this I mean FD. I know the argument that inflation means I actually lose etc but I handle inflation by cutting back other expenses.Little by little the egg nest has grown. Little bits of extra money is never ignored.

    4. I acquire wealth by knowledge and association via simple things like comparing prices, waiting for real sales for most items (even food). Learning how to do without many "necessities". Investing in God's kingdom (giving away money and time helping others)- I believe that this kind of lifestyle is good training and gives me a discipline that affects other areas of my life and God is able to bless me more!

    When I look back, investing in relationships has also reaped much financial benefits. In times of dire need in the past, I have had richer Christian freinds give me financial help. Even here, I save money because freinds give me practial help in fixing something in the house etc that would have cost me a bomb if I had to hire someone to do the job.

    I am sure you get my point :-)

  3. BTW, an interesting example is how much I saved on my container costs when coming to NZ.
    A friend paid some of the cost because she used my container to send some of her things over.
    I helped the container company by graciously agreeing to delay my container for 10 days as they were a new company and had some big last minute clients. A few days later they reduced my shipping costs (despite new rates due to oil prices) as athank you gesture. They arranged to pay for some extra charges I was required to pay etc. These are some of the myraid of examples that for me are relatesd to how indirectly acquire wealth vy "association" :-)

  4. :) okay, i see. my "investments" are more along this line rather than the more complicated "market" business. thanks!