This post 7 of the Christians and Money Series aims to explore economic aspects of natural applications to deal with wealth in-light of the realizations that have emerged over the last 6 posts. The flow of this post will be as follows
- The basic assumption section lays the foundation that underpins natural applications. These assumptions draw from the previous posts.
- The reality check section attempts to define the shared economic baseline from which self-examination can take place. This self-examination provides clarity regarding one’s financial reality and aspirations. (Item 1 and 2 in Post 7)
- The Minas’s parable (mentioned in post 6) reveals wealth stewardship and the shortcomings between social giving and active faith
- This section sacrifices the sacred cow of “Inheritance” by comparing it to RELATIONSHIPS’ focus and value. (Item 3 and 4 in Post 8)
- This section discusses the practical Issues of wealth stewardship and adopting the blend of the Wayside Ministry. (Item 5 in Post 9)
As this post focuses on natural applications, the following sections would appear to offer financial advice, property purchase advice, and wealth management advice. This appearance is unfortunate and difficult to avoid. The natural application draws approaches from the secular domain to identify the metrics to quantify personal wealth situation and economic pursuits relative to the median baseline.
This post 7 is NOT offering any expert advice. Post 7 natural applications are similar to the post 6 goals, creating awareness and supporting new valued-perspectives while laying to rest old ones.
Natural Applications will be divided into 3 parts to promote readability by limiting the post word limit to around 2500 words or less. Post 7, Natural Application 1 will narrate items 1 and 2. Items 3 and 4 will be in post 8, Natural Application 2, while item 5 will be in post 9, Natural Application 3.
The natural applications of money could appear naïve to the casual reader. Therefore it is necessary to clarify the underlying assumption with the hope the reader can share this assumption.
The assumption is to focus on and value God’s 7 appeals in post 4, summarized in one word, RELATIONSHIPS. Posts 5 and 6 expanded the meaning and significance of these RELATIONSHIPS. If the casual reader cannot assimilate these appeals, meaning, and importance as values, the reader will find the ideas floated in this post 7 as laughable and naïve.
The reason being is that these ideas make one vulnerable to be taken advantage of. This truth and fact are unavoidable. Jesus’ allowed Himself to be taken advantage of by humanity when He submitted to His Father’s will to die at the cross. Moreover, God the Father’s offer of Jesus has been rejected and scorned by many.
The world ridicules such naivety, which contradicts Peter in 1Pet2:19-23, who said suffering wrongfully while doing good is commendable before God because God the Father and Jesus have set Themselves an example for the believer to emulate. Notwithstanding this, God realizes the associated risks. There are two safeguards against these risks.
- Internally, believers need to entrust themselves to the hands of the faithful Creator, Father God, (1Pet4:19), the Shepherd (The Lord Jesus), and overseer of the soul, the Holy Spirit (1Pet2:25). This entrusting involves the triune God, shows the severity of the matter.
Entrusting requires the believers to be clear and convicted (Faith) of the hope of heaven as a goal-purpose (1Pet1:3, 1Co15) while pursuing a meaningful and significant relationship with God and Man as Family while on earth.
In such matters, God is the believer’s vengeance seeker (Rom12:19), defender and strength (Psa28:7), and source of honor (Rom10:11).
- Externally, Jesus urged believers to be as wise as serpents and harmless as doves (Mat10:16). Rom16:19 offers Paul’s interpretation, “to be wise in what is good and simple concerning evil.” The Wayside Ministry section of Boundary Concerns will explore the understanding and clarity of what constitutes good to mediate the harm of being taken advantage of.
In summary, believers need to be ready to be taken advantage of and suffer wrongfully. Therefore, It requires one to trust God where faith, hope, and love are operating. Knowing about this “good” that one is doing is wisdom to navigate the treacherous terrain of the 2nd Commandment of loving one’s neighbor as yourself.
This section is somewhat technical. I encourage you to go thru this exercise as an attempt at honest self-examination. This exercise is more rigorous than the reality check of post 1.
This section clarifies the economic reality to create a shared economic baseline for the reader. Man’s economic reality is a by-product of man’s will (choice) and their environment (life circumstances of time and chance). The assumptions of the previous section anchor the reader as they progress along with this post. The following economic realities form the basis to develop the shared economic baseline.
- The median take-home income.
- The median cost of living.
- The poverty threshold to qualify for social aid.
- Affordable housing to accommodate a 4-6 person family size.
I am taking Singapore (location specific), where I reside, as an example to determine the 4 economic realities.
The median take-home income
The individual median take-home income (2019) is $4,000.00. See link for data source- https://stats.mom.gov.sg/Pages/Singapore-Yearbook-Of-Manpower-Statistics-2020-Income-Earnings-and-Wages.aspx.
The median cost of living
The individual median cost of living, excluding rental and housing loans, is $1,200.00. The 4th quintile number is adopted to represent the average cost better. Notably, the 20th quintile is $50 less than the value of $650.00, below which one can qualify for social aid.
The cost of living was computed from the following link. https://www.moneyowl.com.sg/articles/how-much-do-i-need-to-retire-in-singapore-and-how-do-i-build-my-retirement-income-stream/.
The Poverty Threshold to Qualify for Social Aid
Singapore’s Ministry of Social and Family Development means-testing to qualify for social aid is not more than $650.00 per person and below $1,900.00 per household. See link- https://www.msf.gov.sg/Comcare/Pages/Public-Assistance.aspx
Affordable housing to accommodate a 4-6 person family size
Wiki developed the above data. See link –https://en.wikipedia.org/wiki/Median_multiple. It shows how to gauge whether housing cost is affordable or not.
About 80% of Singaporeans live in government-built flats call HDB flats. Private properties cost more than 5 times on a per square feet basis than HDB flats. See the link for the 80% statistics (https://data.gov.sg/dataset/estimated-resident-population-living-in-hdb-flats?resource_id=a7d9516f-b193-4f9b-8bbf-9c85a4c9b61b). The above data shows HDB flats cost is as per the link – https://blog.seedly.sg/what-type-of-hdb-flat-can-i-afford/
Four Economic Metrics to Form the Economic Baseline
Based on the above data, one can develop the following 4 metrics to frame the property aspirations, wealth stage, and standard of living against the median baselines
Determine your living expenses multiplier per persona as a multiple of the median $1200.00 a month per person (average retiree living standard).
Note the $1,200 denominator excludes rental, mortgage, insurance, car loan/maintenance, and education. This value is for the retirement stage of life.
My multiplier W= 1.3 as it includes insurance. This measure quantifies how much beyond or below is one’s living standard relative to the median living standard of a retiree in Singapore. This value of 1.3 means I am living by 30% above the median living standard.
Determine your minimum living expenses multiplier per persona as a multiple of the minimum $650.00 a month per person (below which qualifies for social aid)
Note the $650 denominator excludes rental, mortgage, insurance, car loan/maintenance, and education. This number is the amount below which one qualifies for social aid.
My multiplier X= 2.4 as it includes insurance. This measure quantifies how much beyond or below is one’s living standard relative t the median living standard of a retiree in Singapore. This value of 2.4 means I am living by 140% above the minimum living standard.
Determine your selected house cost as a multiplier of the cheaper housing cost that can accommodate the same number of residents
The median household income of 2 persons, which gives a value of $8,000.00, is the denominator. Therefore, my Z=2.92. This Z value placed the property purchase within the affordable range of 3.0 and under.
Determine the Wealth Stage
Wealth Stage, Z1 comprises of two values
- The 1st value, Z1-1, is the stage of wealth that ranges from 1 to 10.
- The 2nd value is the multiplier of, Z1-2
Determine your stage of wealth using the metric suggested by Investment Moats, reproduced above. See web-link. (https://investmentmoats.com/financial-independence/level-of-wealth-financial-freedom/)
Notes to the Table Above
- The 1st column from the left of the table above reveals the wealth stage.
- This post created the other 2 columns by applying the median standard of living baseline of between $1,200.00 to $1,500.00 per person per month. This table adopted a higher baseline for retirees due to higher health care costs.
- The computation of the wealth assets and cashflow is conservative as it does not account for income from government and insurance annuities.
Balanced Wealth Stage Approach
The balanced approach below adopts a total drawdown to exhaust the accumulated wealth within 30 years to contrast this relentless pursuit of wealth accumulation. To determine this drawdown rate, use the calculator from this link – https://www.noelwhittaker.com.au/resources/calculators/retirement-drawdown-calculator/.
Notes on Table:
- $550,000.00 as the retirement kitty is a very achievable target if employment income occurs at a median of $4,000.00 a month and both couples work till age 55-60 even after factoring education needs for the children assuming local university education.
- The median cost of living (3rd column) is used to derive the wealth stage median value (2nd column).
Z2 comprises of two values
- The 1st value, Z2-1, is the stage of wealth that ranges from 1 to 7.
- The 2nd value is the multiplier of Z2, Balanced Wealth Stage Multiplier, Z2-2
Z2-2 gives the excess or deficit of one’s Wealth Status baselined against the Balanced Wealth Approach as the median.
For example, if the net worth is $1,000,000.00 in investable wealth occurring at the stage of wealth, Z2-1=7, the multiplier, Z2-2= 1.8 times the 7th stage median value.
These numbers relate to individuals with the median or above earning capacity. The Wayside Ministry section will address this reality in-context of money stewardship for individuals with earning capabilities less than these numbers.
It is also timely to recall that previous posts established wealth addiction afflicts both the wealthy and the poor alike. It is not the amount of wealth or poverty, but at the heart of this addiction is the unresolved RELATIONSHIPS issues. It is Man’s heart condition.
Economic realities are environmental forces that confront both the rich and the poor. However, personal decisions determine each person’s economic baselines. The picture above used anchors to represent economic baselines, and the boat represents each person’s life. These anchors offer stability, but it also prevents a person from moving on. These anchors can also weigh down the boat and contribute to the boat sinking in the most extreme circumstances of oversized anchor weight. The anchors are necessary, but Man needs the wisdom to determine the suitable anchor weight and number of anchors
Post 9 will offer perspectives to consider suitable anchor sizes and the number of anchors used in different life circumstances to illustrate natural application in action.