Faith Financial: How Does It Work?

Faith and finance intersect in several ways, with many people seeking to align their money management with their religious beliefs. This is known as faith-based investing, which involves choosing investments that align with one's religious values. Faith-based investing is a type of values-based investing, where individuals choose investment professionals and vehicles that align with their values. This strategy is subject to the same risks as any other investment approach, including economic, interest rate, and geopolitical risks.

FaithFi is an example of an organisation that helps people integrate their faith with their finances. Through curated articles, podcasts, and videos, FaithFi provides guidance on how to manage finances from an eternal perspective and make wise financial decisions.

Christian faith, for example, promotes the concept of stewardship, where individuals are seen as managers of God's money, using it to accomplish His desires, goals, and objectives. This perspective influences how Christians approach earning, spending, saving, and giving money.

Faith-based investing is not limited to Christianity; it is also prevalent in other religions such as Islam and Judaism, where investors make decisions based on their respective religious guidelines and values.

Faith-based investing

Faith-based investors often choose investment managers, companies, and investments that align with their religious values. Many faith-based investment strategies focus on ethically and socially responsible investments. For example, most faith-based styles exclude investment in companies that are deemed immoral, such as those involved in alcohol, tobacco, adult entertainment, gambling, weaponry, and weapons of mass destruction.

Different religious groups have different investment principles and strategies. For instance, Catholic investors follow principles outlined by the Catholic Framework for Economic Life, which is based on "human dignity and the moral law". They often avoid investing in firms that engage in racial discrimination, support abortion, or produce weapons of mass destruction. Instead, they may favour companies that support human rights, environmental responsibility, and fair employment practices.

Protestant denominations, on the other hand, encourage followers to make investments based on broad Christian values, such as social consciousness. The Church of England, for example, has an Ethical Investment Advisory Group that provides support and guidance in areas relating to investment choices, policies, and relationships between investment managers and investors.

Islamic law, or Shariah, also teaches followers to live by a set of guidelines while seeking returns on their investments. These guidelines include avoiding short-term speculation, interest-bearing investments, companies that engage in alcohol, pornography, or gambling, heavily indebted companies, and pork-related businesses.

Jewish values also guide investors who want to align their faith with their investment strategies. Philanthropy and diversification are key principles in Jewish religious teachings, and these values often lead investors to do good with their money.

It is important to note that faith-based investing, like conventional investing, does not guarantee returns and is subject to the same risks as any other investment style, such as economic, interest rate, and geopolitical risks.

Christian faith and money management

Faith-based investing is an investment philosophy that aims to maximise investor returns by aligning investments with an individual's religious values and principles. It is also known as values-based investing or Biblically Responsible Investing. Faith-based investors choose investment professionals and vehicles that align with their religious beliefs.

Christian Perspectives on Money Management

Christians often refer to the concept of stewardship when discussing money management. This means recognising that God is the owner of everything, including money, and that humans are simply managers of what He has entrusted to them. This perspective encourages Christians to manage their finances wisely and in alignment with their faith.

Applying Faith to Financial Decisions

When applying Christian faith to financial decisions, it is important to consider four key elements of stewardship:

• Calling: Understanding your personal calling and ensuring your income is earned in a way that aligns with your values.
• Controlled Spending: Living a controlled lifestyle, spending intentionally, and being cautious about debt.
• Savings and Investments: Living below your means, saving with a purpose, and ensuring your investments align with your faith.
• Giving: Giving regularly and systematically, in proportion to your income, with an eternal Kingdom mindset.

Faith-Based Investing Strategies

Faith-based investment strategies vary across different Christian denominations. For example, Catholic investors follow the Catholic Framework for Economic Life, which outlines 10 faith-based guidelines for economic and financial decisions based on human dignity and the moral law. They may invest in firms that support human rights, environmental responsibility, and fair employment practices.

Protestant investors, on the other hand, are encouraged to make investments based on broad Christian values, such as social consciousness. Some Protestant denominations have ethical investment advisory groups that provide guidance on investment choices, policies, and social and ethical concerns.

Faith-Based Resources

There are various resources available to help Christians integrate their faith with their finances, such as the FaithFi app, which provides curated articles, podcasts, and videos on managing finances from a Christian perspective. Additionally, books like "Faith and Finances" by Patrick Blair offer a modern guide to Christian finances, while "YOUR FINANCES GOD'S WAY" by Scott LaPierre provides biblical guidance on money management.

Faith-based loans

For example, in Christianity, the concept of stewardship is often applied to money management, implying that individuals are responsible for using God-given resources to accomplish divine goals and objectives. This perspective suggests that Christians should strive to align their financial decisions with their faith convictions, including how they earn, spend, save, and give money.

In terms of investing, faith-based investors seek to generate returns by choosing investments that align with their religious beliefs. They often opt for managers, companies, and investments that share their values, making this strategy synonymous with values-based investing. Faith-based investment strategies commonly focus on ethical and socially responsible choices, typically excluding investment in industries deemed immoral, such as alcohol, tobacco, and weaponry.

While faith-based investing does not guarantee returns and is subject to the same risks as conventional investing, it allows individuals to make financial decisions through the lens of their religious values. This approach is not limited to Christianity, as faiths like Islam and Judaism also provide guidelines for their followers seeking to align their investments with their beliefs.

In conclusion, while the term "faith-based loans" may not be a widely recognized term, the concept of integrating faith and finances is prevalent, influencing individuals' financial decisions and investment strategies. This integration ensures that their economic choices align with their religious values and beliefs.

Biblical money management guides

The Bible has a lot to say about money, with over 2,000 verses relating to the topic. Here are some Biblical money management guides:

Spend Less Than You Earn

Proverbs 13:11 states, "Wealth quickly gotten dwindles away, but amassed little by little, it grows." This principle is about being intentional with your spending and not giving in to the constant advertising that encourages impulsive buying.

Be Wise With Debt

Debt can be a trap that mortgages your future and lowers your standard of living. Proverbs 22:7 illustrates this point: "The rich rule over the poor, and the borrower is slave to the lender." This verse highlights the power dynamic between the lender and the borrower, where the borrower becomes enslaved to the lender.

Plan for Financial Margin

This principle is about preparing for unexpected expenses and building liquidity for short-term emergencies. Proverbs 6:6-8 encourages people to be like the ant, which works hard during the summer to prepare for the future: "Go to the ant, you sluggard! Observe its ways and become wise. Without leader, administrator, or ruler, it prepares its provisions in summer; it gathers its food during harvest."

Set Long-Term Goals

Setting long-term financial goals helps to establish a clear direction for your money and ensures you are working towards something meaningful. Philippians 3:14 says, "I continue my pursuit toward the goal, the prize of God's upward calling in Christ Jesus."

Give Generously

Giving breaks the power that money has over us and allows us to trust in God. II Corinthians 9:6-9 says, "Consider this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each must do as already determined, without sadness or compulsion, for God loves a cheerful giver."

God is the Source

The Bible teaches that God is the source of everything, including our financial provision. Philippians 4:19 says, "My God shall supply all your need according to his riches in glory by Christ Jesus." This principle shifts our focus from our own efforts to God's provision and reminds us that prayer is essential in our financial journey.

Live on a Margin

Living on a margin means allowing room for unexpected expenses and being efficient with what you have. This principle applies to physical, spiritual, time, and financial margins.

Save Money

Proverbs 21:20 encourages saving for the future: "There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up." Saving money allows you to prepare for unexpected expenses and work towards financial goals.

Keep Out of Unnecessary Debt

Psalm 37:21 warns against borrowing: "The wicked borroweth, and payeth not again." Getting into debt can lead to a loss of freedom, as illustrated by Proverbs 22:7, "The rich ruleth over the poor, and the borrower is servant to the lender."

Be Content with What You Have

Hebrews 13:5 encourages contentment: "Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee." This principle is about finding satisfaction in what you have instead of constantly chasing after more.

Keep Records and Budget

Proverbs 23:23 emphasizes the importance of wisdom and understanding in financial matters: "Buy the truth, and sell it not; also wisdom, and instruction, and understanding." Keeping records and creating a budget are essential tools for effective money management.

Don't Cosign

Proverbs 27:13 warns against cosigning and taking on the debt of others: "Exercise extreme caution in cosigning." When you cosign a note, you are essentially borrowing money, and it can lead to financial trouble if the other person defaults.

Work Hard

The Bible values hard work and thriftiness, and it is important to put in the effort to earn an income. Proverbs 14:23 says, "In all labour there is profit: but the talk of the lips tendeth only to penury [poverty]."

Seek Godly Counsel

When making financial decisions, it is wise to seek advice from godly people who share your values. Psalm 1:1 says, "Blessed is the man that walketh not in the counsel of the ungodly." This principle helps to avoid making impulsive decisions and ensures your choices align with your values.

These principles provide a framework for managing your finances in a way that honors God and helps you to stay focused on what truly matters.

Faith-based financial courses

One key concept in faith-based financial courses is the idea of stewardship, which is particularly prominent in Christian faith and finances. Stewardship recognises that God is the true owner of everything, including money, and that individuals are merely managers or stewards of the resources entrusted to them by God. This perspective shifts the focus from individual ownership to responsible management and aligns financial decisions with God's desires and objectives.

• Understanding biblical principles for managing money
• Overcoming the temptation to idolise money
• Applying faith to earning, spending, saving, investing, and giving decisions
• Encouraging intentional and purposeful spending
• Cautious use of debt
• Joint financial goal setting for married couples
• Saving with a Kingdom purpose in mind
• Aligning investments with faith convictions
• Systematic and proportionate giving
• Supporting charitable causes

The goal of faith-based financial courses is to provide individuals with the knowledge and tools to make wise financial decisions that honour God and apply their faith to their everyday financial practices.

In addition to educational courses, individuals can also find faith-based financial resources through books, apps, podcasts, and communities that offer guidance and support in integrating faith and finances. These resources provide ongoing encouragement and help individuals stay committed to their faith-based financial journey.

Frequently asked questions