Today we are exploring a question that I often get asked (or ask myself) from those who have a heart for Biblical Stewardship.

“How do I balance giving/generosity with saving/retirement?”

It is a difficult question, but an honorable one. In the Parable of the Talents (Matthew 25), we see that each servant was given “in accordance with his ability). I once wrote on how this ability was perhaps largely a measure of their faith, but I have little doubt that even the “5 talent servant” still had to wrestle with questions of what to do with the resources entrusted to him. The balance of giving vs. saving is one that all Christians will eventually have ponder.

This article is not for those who at the beginning of their financial stewardship journey. This is for the “5 talent servants” who have moved beyond the basics and are exploring deep, hard questions about the balance between generosity and saving. If you are following Dave Ramsey’s Baby Steps, you will find the most value here if you are already at Baby Step 4, “Invest 15% of Household Income Into Retirement” or above.

A note to those just starting out in stewardship

Having said that, if you are earlier in your journey, I’ll give a couple quick pointers to help you out. Often people ask if they should tithe while still paying down debt or trying to build up savings. In these cases, I usually encourage people to begin tithing right away, but don’t give above the tithe till they get the rest of their financial house in order. The tithe is God’s money and you are not giving, but returning it to Him. Always tithe with no exceptions.

Giving above the Tithe are free-will offerings. While these are great and I would encourage you to hear the Holy Spirit on His urging for you to give, generosity must always be coupled with stewardship. Scripture speaks about Debt and Savings so we must ensure we have those in a Biblical position before we give above the tithe. Pay off your non-mortgage debt first, then build your emergency fund (3-6 mo living expenses), then build up your retirement to 10%, and then increase giving and savings. There are sometimes exceptions (I always encourage people to contribute up to their employer 401k match right away, as that is “free money”), but these are good principles to follow. Read the rest of this article once you’ve arrived to this point!

Back to you 5 talent servants!

Now back to those who are already tithing, have paid off their debt (aside from mortgage), have a 3-6mo emergency fund, and are investing at least 10% in to their long-term retirement savings. Congratulations! You are in an excellent position. God has blessed you as you’ve followed many of His principles of stewardship.

….but now you are struggling to know what to do next. Perhaps you’ve asked these questions:

• “Should I give more money or save more for retirement?”
• “Should I decrease my retirement savings to give more generously?”
• “Should I pay more down on the house (or toward a down payment), give more, or invest more?”
• “I want to be generous, but is it better to give now or give later once I’ve invested the money and its grown?”

These are hard questions! I recently re-read Randy Alcorn’s book “Money, Possessions, and Eternity” and found that even he spoke to the struggle and “tension” found in these questions. While it was discussed at length, I feel this is one weak area of an otherwise excellent book as he never really gives a good answer.

My intent is to give one answer to these questions. It may not always the best answer for everyone and I’m not saying it is the only Biblical truth, but it has helped me to strike a balance in my own giving vs. savings.

One of the primary verses in the Bible regarding Retirement savings is the Parable of the Rich Fool, found in Luke 12:13-21. Here’s the story:

16 And he told them this parable: “The ground of a certain rich man yielded an abundant harvest. 17 He thought to himself, ‘What shall I do? I have no place to store my crops.’

18 “Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain. 19 And I’ll say to myself, “You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.”’

20 “But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’

21 “This is how it will be with whoever stores up things for themselves but is not rich toward God.”

Many have found fear of saving for retirement in this story, even to the point of some discouraging any long-term savings. Often they’ll couple this with verses on the difficulty of a rich man entering heaven (Matthew 19:24) in the story of the rich young ruler. I don’t believe this is the intent of the parable at all.

What I believe is one of the key verses here is v. 21 where Jesus qualifies the story with “whoever stores up things for themselves but is not rich toward God”.

The Bible talks much about the value of saving and investing. Proverbs Chapter 6 speaks of the ant that stores up in Summer for the Winter months. Ecclesiastes 11:12 encourages us to divide our investments to 7 or 8 portions for we “know not what disaster may happen on the earth”. God is not against savings! Savings are one way that God provides for our needs. When he blesses us abundantly it is wise to use that surplus to prepare for years of less, just as Joseph did in Egypt. There is no less faith in God to live off of savings that He provided and we wisely stored up than being broke and relying on Him to provide for us!

Ok, now that we (hopefully!) agree savings is good and Biblical, how do we not become the Rich Fool with our retirement savings?

The key is to be rich toward God.

The rich man was a fool because he saved without being generous. We have no indication from the parable that he increased his giving in proportion to his increased savings. This isn’t what we want to do!

What I’ve found as a balance to this struggle is this simple rule of thumb.

Give as much money each year as you invest in long-term retirement savings.

At a basic level, you should be giving the tithe (10%) and investing 10% for long-term savings. As your resources allow you to go above that, I would encourage you to increase both at equal rates. If you have an extra 10% in your monthly budget beyond your other needs (spending, medium-term saving, etc.), rather than increasing your retirement savings to 20% and keeping your giving at 10%, increase both to 15%.

Now what about other questions such as paying down the house early or increasing lifestyle spending? Perhaps you are even thinking about cutting some lifestyle spending to free up more for investing/giving.

You’ll still need to ask those questions. I’d encourage you to prioritize this way:

1. Determine your monthly spending and medium-term savings with a solid annual budget (2-5 year expenses, like cars, appliances, etc.).
2. Set a retirement goal and target % to reach this (likely 10-20% of income, depending on your current savings and age). Use a retirement calculator to help with this.
3. Set both your giving and retirement savings to the above percentage
4. Revisit your monthly budget (Step 1) and allocate at any more “excess”. Pray about increasing lifestyle spending, paying down the house early, or continuing to increase giving or giving/retirement together. At this point I don’t think you can really go wrong with any of those and have freedom to move as the Spirit leads.

What if you find you don’t have enough in your budget to meet your retirement goal and also give the same amount? For example, let’s say 15% is your retirement goal but if you do that you can only do 10% in your giving. In this case I would still encourage you to do equal percentages and make both 12.5%.

While it may appear this isn’t wise as it doesn’t allow you to meet your retirement goal, I wouldn’t want to be in a place where I am being rich toward myself and not toward God. We don’t know what the future holds so we should be generous with what God has entrusted us today and not put it off for the future. There is an element of faith here, but I believe God will reward your heart and provide for your future, either by providing later or by increasing your resources now to allow you to increase both to 15%.

I have found much freedom in this approach as God has blessed me to be able to give above and beyond the tithe. This year I was able to give 20% of my income and invest another 20% toward long-term savings. In the coming years, I may decide to lower these down to 15% and 15%, as 15% would still be enough for my retirement goals and the 10% it would free up could be used toward another big goal (paying cash for my next home). Eventually I hope that I have more than enough going toward retirement to meet my retirement goal and would begin increasing giving above the percent going toward retirement.

Again, I understand that many are a long way off from asking this question. I always want to be sensitive to those who are still at the beginning stages of their journey. If you are one of those, look to this as an encouraging goal and not a discouraging challenge!

However, for those that have been given much, much is required (Luke 12:48). As you move up the ranks of your stewardship responsibility and God continues to bless you, you need to challenge yourself to learn more and steward these greater resources. Otherwise you will eventually stagnate in your growth.

God owns everything and He is looking for people who have grown in their ability so they can manage these great resources for the Kingdom. Ask these hard questions and pray about the answers. God cares about your Finances! They are powerful in directing your heart toward or away from God. Make sure you are always being rich toward Him and not just yourself and you’ll find that you won’t fall in to the trap of becoming rich and no longer relying on God, as Solomon lamented in Proverbs 30:9.

There is much more I would love to write on this, but we’re already at nearly 2,000 words so those will wait for another day! Be sure to subscribe for my email updates below and I’ll notify you when I post new content on questions such as “Is Retirement Biblical?”, “Is God Against Wealth?”, and more!

Blessings,

Ira