Seven Signs of Financial Health

As a pastor, I am passionate about helping my people grow in financial stewardship.  God wants you to tithe, be generous, and provide for your family, but if you lack financial wisdom then you will struggle to do what God wants you to do.  Your life will be much harder than it needs to be, and you will struggle to live with joy and peace.  So, the purpose of this short post is to help you grow in financial stewardship.  

Recently I watched a short video by Rachel Cruze (Dave Ramsey's daughter) called "7 Signs You are Way Above Average."  I think a better title would be "Seven Signs of Financial Health."  The video provides a helpful test to measure your current financial health.  I've summarized the points below.  I don't want this to be discouraging, but simply a teaching tool for what you need to be aiming at to achieve financial peace.  For some of you, this will be very encouraging as you discover that you are doing better than though thought.  For others of you, this will be a warning that you need to get more serious about your finances.  

1) You're living without debt (or you're actively trying to pay it off).  

The average U.S. adult owes $66,702 in debt, and 77% of American households carry at least some type of debt.  If you are debt free, you are really weird, and also doing really well.  The best way to pay off debt is to make a list of all your debts, smallest to largest; continue to pay the minimum on all of them, but pay off the smallest as fast as possible.  

2) You have savings.  

As of 2022, the median savings balance for Americans 35 and younger was about $5,400; for ages 35-64, it is between $7,500 and $8,700.  It is important to have savings to handle emergencies without going into debt or losing your house and car.  I like to say that sufficient savings turn emergencies into inconveniences.  It is recommended that you save up 3-6 months of living expenses in a savings account that you only use for emergencies.  

3) You are planning for retirement.  

Most people aren't saving for retirement, and if they are, it is only around 3-5%.  Financial experts recommend that you invest 15% of your gross monthly income into retirement.  

4) You're able to celebrate others' wins. 

If you are able to cheer for others when they win and enjoy life it shows that you are not jealous and are content with your financial situation.

5) You own a home.  

If you are managed to buy a home, then you are ahead of 35% of Americans who don't own the home they live in.  Dave Ramsey recommends that when you buy a home, shoot for a 15-year fixed-rate mortgage that is no more than 25% of your take-home pay.  

6) You practice generosity.  

This includes tithing to your church, and then giving over your tithe to charitable causes that you are passionate about.  

7) You're earning the median income.

The median income is about $80,610.  If you're earning within $10,000-$15,000 of that, then you're doing well.