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Foundational Principles

Making Your First Million

By Austin Pryor
Sound Mind Investing

CBN.comStarting when you're 30, save $264 a month. Invest it in a tax-deferred account such as an IRA, and earn an average return of 10 percent per year. When you turn 65, voilà, you'll have a million bucks (or so).

Of course, how much that will buy when you reach retirement is another story. Assuming three-percent inflation, it will be worth about one-third as much as it is today. I throw that in only to impress you with the fact that, while $264 is a nice starting point, you'll probably want to set aside much more.

For now, however, the question is this: Do you have an extra $264 each month? Or let me put it this way: If your family were a business, would you be showing a profit of at least $264 a month? After all the income is counted and all the bills are paid, is there money left over? There better be, because that monthly surplus is the key to building your financial security.

If you're not sure you even have a monthly surplus (let alone how much it is), then you have two choices.

One, you can continue your "easy come, easy go" approach, spending your money according to your moods and whims of the day. That's a fun way to go through life—until you begin drowning in a sea of debt. Meanwhile, you're robbing yourself of the opportunity to move toward financial stability and security. By the time you come to your senses, it could be too late to redeem the situation.

Or, two, you can buckle down and develop a plan to guide your spending decisions. Sure, creating and living by a budget is a hassle. But if you're tempted to skip this important step, you do so at your peril. For 99.9 percent of us, living by a budget is absolutely essential if we're to progress financially. A winning and gratifying financial strategy begins with your monthly surplus. And making sure you have a monthly surplus begins with a workable budget and—there's no sense kidding ourselves—a healthy dose of self-discipline.

A good spending plan can help you to:

• Apply your current income more strategically as you reduce or eliminate frivolous or irresponsible spending.

• Improve communication with your spouse as you set priorities.

• Steadily eliminate your debt.

• Raise your standard of living.

• Equip yourself to withstand economic downturns.

• Increase your giving to the Lord and His work.

• Stay motivated by giving you a sense of accomplishment as you measure your progress.

• Reach financial goals that would otherwise be unattainable.

• Invest with regularity.

Many resources are available that will guide you through the process of putting together a workable spending plan. They generally follow an allocation-type strategy in which all your expenditures are categorized and budgets assigned to each category. Spending is monitored weekly (or monthly) to make sure you're staying within the amounts allotted.

The "how to" workbook I'm most familiar with is the Family Financial Workbook by Larry Burkett. It shows you where to start and how to stay on track. It offers practical advice about managing your finances and provides a series of easy-to-follow worksheets that allow you to structure and maintain your family's budget.

A book by Ethan Pope called Creating Your Personal Money Map is also designed to help you set up a spending plan. The big emphasis here is the relative simplicity of the suggested record-keeping system. If you've set up a system but then had trouble living with it, you might check out Pope's approach.

Another helpful resource that I can heartily recommend is Money Talks and So Can We by Ron and Judy Blue. The Blues provide a framework through which couples can successfully communicate about their finances. By specifically addressing some of the most common conflicts, this book provides practical advice and valuable tools couples can use to strengthen their marriages.

Now, back to planning tips. Here are some additional pointers on setting up a workable plan from Stephen and Amanda Sorenson in their 1995 book Living Smart, Spending Less:

• Be conservative in your income expectations. If you earn more than expected, you'll progress even faster.


Sound Mind Investing exists to help individuals understand and apply biblically-based principles for making spending and investing decisions in order that their future financial security would be strengthened, and their giving to worldwide missionary efforts for the cause of Christ would accelerate. In other words, we want to help you have more so that you can give more.

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