Please reply to this thread that must be 450 to 500 words, and include 2 peer-reviewed references and one biblical integration,. A large part of wealth management is deciding how much of a budget sh

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Please reply to this thread that must be 450 to 500 words, and include 2 peer-reviewed references and one biblical integration,.

A large part of wealth management is deciding how much of a budget should be allocated to spending, saving, paying taxes, investing, and paying off debt.  Biblical stewardship is allocating the money that God has entrusted us with by asking Him for guidance and wisdom.  Wise financial decisions should include avoiding debt, setting long-term goals, building margin, spending less than you earn, and giving cheerfully and generously. When making these financial decisions, it is important to remember that God owns it all.  1 Corinthians 10:26 says, “For, ‘The earth is the Lord’s, and everything in it’”.

Regarding debt, the Bible teaches in Proverbs 22:7 that, “The rich rule over the poor, and the borrower is slave to the lender”.  It is important to avoid debt, save up for large purchases, and pay down current debt that has high interest payments.   Consumerism is rampant and is defined as excessive materialism (Amanda, 2018).  Before making a large purchase, it is important to evaluate the costs.  In Luke 14:28, Jesus says, “Suppose one of you wants to build a tower.  Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” Additionally, it may be necessary to sell possessions that are causing debt in order to free up money to use for different budget items.

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Regarding giving, the Bible calls us to have open hands for the glory of God instead of holding firm to this world, the possessions we currently have, or the potential money we could make through investing.  God commands us to give and 1 Corinthians 16:2 says, “On the first day of every week, each one of you should set aside a sum of money in keeping with your income, saving it up, so that when I come no collections will have to be made.” God also tells us the attitude we should have while giving. 2 Corinthians 9:7 states, “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver”.

A large part of creating an investment strategy is deciding how to allocate the money amongst different investment vehicles.  While high returns may seem appealing, it is important to consider the risk associated with each investment.  The yield curve shows that as risk increases for an investment, the yield also increases for the investment.   Investors must decide how much of their wealth to put at risk based upon the trade-off between risk and return (Bodie et al., 2022).  Each individual security in the portfolio must be analyzed to determine how it is contributing to the portfolio’s overall risk and return (Bodie et al., 2022).  For instance, money market instruments typically have lower returns and risk than equity investments that typically have higher returns and risk (Bodie et al., 2022).  One method of analyzing these investments is by determining the standard deviation of returns (Borsboom & Zeisberger, 2020).  When investing, it is also important to have an eternal perspective instead of an earthly perspective.  Matthew 6:19-21 says, “Don’t store up treasures here on earth, where moths eat them and rust destroys them, and where thieves break in and steal.  Store your treasures in heaven, where moths and rust cannot destroy, and thieves do not break in and steal. Wherever your treasure is, there the desires of your heart will also be.” It is also important to remember that everything, including stock performance, gains, and success, comes from God.  Because we come into this world with nothing and we leave this world with nothing, we should treat our investments with open hands.  1 Timothy 6:6-8 says, “But godliness with contentment is great gain.  For we brought nothing into the world, and we can take nothing out.  If we have food and clothing, we will be content with these.”

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