There are six things you need to know about money.

# 1       You need to understand the difference between assets and liabilities.

First, let’s deal with the definitions. . .so we’re viewing this in a proper perspective.

An asset according to investopedia.com is:

“A resource having economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.”

Here are four things you should know about assets.

An asset is something that puts money in your pocket or increases your net worth.

Assets will increase your credit score.

Assets will make you a better risk for a bank . . . although I’m not advocating that you borrow money. 

Assets appreciate in value.

The American Heritage Dictionary defines liability as:

“Something for which one is liable; an obligation, responsibility, or debt.”

Here are four things you should know about liabilities.

A liability is something that takes money out of your pocket and decreases your net worth. 

A liability will decrease your credit score. 

Financial liabilities make you less likely to receive bank loans at favorable interest rates. 

A liability is something that depreciates in value, i.e., a car, big screen TV, designer wardrobe and in some locations, a house or rental property.

Financially independent people have assets while broke people have liabilities.

# 2       You need to understand the difference between income and expenses.

Income according to the American Heritage Dictionary means:

“The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments.”

Income is something you trade your time for. . .on the job or in reviewing possibilities for investments that will have the desired effect of producing income.

Expense is defined in the Random House Dictionary are:

“a cost or charge; a cause or occasion of spending.”

Just a few minutes sitting in an automobile dealers showroom or standing at the check-out counter at a department store you can create expenses that will take hours, days or even years to pay off.

Income is your friend. . .expenses . . . not so much.

Proverbs 10:16 in the New International Version says:

“The wages of the righteous bring them life, but the income of the wicked brings them punishment.”

If you use your income to buy things that create expenses greater than your income, then you have a problem.
 

The scripture offers one clear thing that we should be doing with our income.
 

1 Corinthians 16:2 in the New International Version says:

“On the first day of every week, each one of you should set aside a sum of money in keeping with his income, saving it up, so that when I come no collections will have to be made.”

# 3       You need to understand the difference between sowing and reaping.

I’ve spent a great deal of time teaching about sowing and reaping over the years.  If you visit our website www.debtfreearmy.organd type either word in the search engine you will literally find a library of financial teaching on the subject.

Galatians 6:7 in the Amplified Bible says:

“Do not be deceived and deluded and misled; God will not allow Himself to be sneered at (scorned, disdained, or mocked by mere pretensions or professions, or by His precepts being set aside.) [He inevitably deludes himself who attempts to delude God.] For whatever a man sows, that and that only is what he will reap.”

If you sow apple seeds you will reap apples.

If you sow love you will reap love in return.

If you sow kindness you will reap kindness.

If you sow money you will reap a financial harvest.

Everything you sow reproduces after its own kind.

Genesis 1:12 says:

“And the earth brought forth grass, and herb yielding seed after his kind, and the tree yielding fruit, whose seed was in itself, after his kind: and God saw that it was good.”

Simply said, whatever you sow, you reap.

# 4       You need to understand that money, just like any seed, is meant to be multiplied.

Everything functions as a seed and money is no different.  What you sow you will reap.

God is serious about multiplication.  When you follow His instructions for living even in the midst of adversity your income and assets will be multiplied.

Consider the story of Jacob and the words found in Exodus 30:30.  I’m using the Amplified Bible which says:

“For you had little before I came, and it has increased and multiplied abundantly; and the Lord has favored you with blessings wherever I turned. But now, when shall I provide for my own house also?”

Also review the parable of the talents and you will see that God wants us multiplying the seed that comes to us.

I suggest you read my blog on “The Greatest Mathematician That Ever Lived” for more teaching on why God loves multiplication.

# 5       You need to understand the difference between a savings and investment mentality and a consumer mentality.

The Proverbs woman is used as an example of how to choose and secure wise investments.  Consider the words of Proverbs 31:16 in the Amplified Bible which says:

“She considers a [new] field before she buys or accepts it [expanding prudently and not courting neglect of her present duties by assuming other duties]; with her savings [of time and strength] she plants fruitful vines in her vineyard.”

Sadly, way too many believers spend everything they get their hands on either out of desire or necessity.

The word consume according to the American Heritage Dictionary means to:

“waste or squander.”

In other words, a good consumer by definition is someone who is very good at wasting their money.

Which leads to the sixth and final thing we need to remember about money.

# 6       You need to understand the difference between financial discipline and instant gratification.

It should come as no surprise why corporations and businesses spend billions of dollars on advertising.  Their purpose is not to improve the quality of your life but to use your hard-earned money to build their corporate bank accounts.

Have you heard the old expression “living hand to mouth?”

I have a different variation on that phrase.  Advertisers are living by taking their hand and removing what should be going into your mouth.

Sadly, the advertisers take advantage of unsuspecting believers who, without financial discipline, will choose instant over delayed gratification.  We live in a culture where people see something and they want it now. . .advertising feeds that habit by conditioning people to believe they can have it and have it all right now.

As a boy growing up in eastern North Carolina. . .I bought things on layaway . . . a term which is somewhat foreign to younger consumers.  I remember putting a fur coat for my mother (sorry PETA) on layaway at a department store where I made weekly payments for nearly a year.

I had the confidence in knowing that when I gave Mom that coat on Christmas morning it was totally paid in full.

However, today it’s like the words of the song “GOT TO. . .GOT TO. . .GOT TO HAVE IT. . .RIGHT NOW.”

If I were to summarize the six things you need to understand about money it would simply be this. . .you cannot spend your way to financial freedom but you can save and invest your way there.

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