Financial knowledge is the understanding of financial concepts, terms, and practices. It includes:
- Knowing how to create and manage a budget
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Understanding different types of investments
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Being familiar with financial products like loans and insurance
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Grasping basic economic principles
This knowledge forms the foundation of good money management. It's the "what" and "how" of finances.
Wisdom is the profound ability to apply knowledge, experience, and understanding to make sound judgments and decisions. It's more than mere intelligence; it encompasses discernment, foresight, and a deep comprehension of life's complexities.
For Christians, wisdom also includes interpreting and applying biblical truths and principles to everyday situations. In the Bible, wisdom is contrasted with folly (Proverbs 14:8, Proverbs 28:26). Folly means that one lacks good sense and lives foolishly.
Financial wisdom, therefore, is the ability to:
- Apply financial knowledge in a way that aligns with your values and goals
- Make sound financial decisions based on both facts and intuition
- Understand the long-term implications of financial choices.
- Use money in a way that honors God and serves others
Wisdom is often cultivated through challenges, failures, and successes, and it's a quality that continues to evolve throughout one's life. A wise person not only possesses knowledge but also knows how and when to apply it, demonstrating sound judgment and empathy in various situations.
So to gain financial wisdom it is important to:
- Reflect on your past experiences - both good and bad - and look for the fundamental lessons.
- Fear the Lord because scripture tells us repeatedly that the fear of the Lord is the beginning of knowledge. Proverbs 9:10 states, "The fear of the Lord is the beginning of wisdom, and knowledge of the Holy One is understanding."
- Be humble. 1 Corinthians 1:27 reminds us, "But God chose the foolish things of the world to shame the wise; God chose the weak things of the world to shame the strong." In order to fear the Lord, we must approach our finances with humility.
- Seek godly counsel. Proverbs 15:22 says, "Plans fail for lack of counsel, but with many advisers they succeed."
- Study God's Word. The Bible is full of financial wisdom. Take time to study and apply these principles.
- Pray for wisdom. James 1:5 encourages us, "If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault, and it will be given to you."
While financial knowledge provides the tools, financial wisdom guides their use. Knowledge tells you how to balance a checkbook; wisdom helps you decide how to allocate your resources. Knowledge informs you about investment options; wisdom helps you choose investments that align with your values and goals.
As Christians, we're called to be good stewards of all that God has entrusted to us. This requires both knowledge and wisdom. We need to understand financial principles (knowledge) and apply them in a way that honors God and serves others (wisdom).
Rate yourself on a scale of 1-5 (1 = Novice, 5 = Expert) for each item:
Biblical Financial Knowledge:
__ Understanding of tithing principles (Malachi 3:10)
__ Familiarity with biblical teachings on debt (Proverbs 22:7)
__ Knowledge of scriptures about saving (Proverbs 21:20)
__ Understanding of biblical principles of generosity (2 Corinthians 9:6-7)
Biblical Financial Wisdom:
__ Ability to make financial decisions that honor God (Proverbs 3:9-10)
__ Discernment in balancing earthly and heavenly treasures (Matthew 6:19-21)
__ Application of the principle of stewardship in all financial matters (1 Peter 4:10)
__ Contentment with God's provision while managing finances (Philippians 4:11-13)
__ Wisdom in planning for the future while trusting God (James 4:13-15)
Reflection Questions:
In which area (biblical knowledge or wisdom) did you score higher? Why do you think that is?
Identify one area where you'd like to grow. What scripture can guide you in this growth?
How can you better apply God's Word to your financial decisions this week?
Action Step:
Choose one financial decision you need to make soon. Write down:
a) A relevant Bible verse that can guide this decision
b) How you can apply both biblical knowledge and wisdom to make this decision
c) A prayer asking for God's guidance in this matter, remember Proverbs 2:6: "For the Lord gives wisdom; from his mouth come knowledge and understanding." Keep seeking God's guidance in your finances!
In your financial journey, strive for both knowledge and wisdom. Learn about financial concepts and practices, but also seek the wisdom to apply them correctly. Remember, true financial wisdom comes from God and is aligned with His principles.
I teach these exact principles in my new course Redeeming Your Finances that is now open for enrollment!
As you grow in both financial knowledge and wisdom, you'll be better equipped to manage your resources in a way that not only benefits you and your family but also allows you to be a blessing to others and further God's kingdom.
