Giving Meaning to Money® Devotional
EDITOR — JON C. WIEBE
WRITER — MATT BELL
Matt Bell is Sound Mind Investing's Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets. To read his blog and learn more about his work, visit www.soundmindinvesting.com.
Automating Financial Wisdom
July 1, 2019
Therefore, if anyone is in Christ, the new creation has come: The old has gone, the new is here! ~ 2 Corinthians 5:17
I have a love/hate relationship with financial automation.
On the one hand, automation can be a wonderful help. In our household, we have some of our bills set up as auto-pay—those that cost the same amount every month. For others, I prefer to check for accuracy before paying them. I also use automation to make twice-monthly contributions to my employer’s 401(k) plan. And our online budget tool automatically records and even categorizes much of our cash flow—a big time saver.
On the other hand, automation has a downside. My concern is that millions of people are now having financial actions automatically taken on their behalf without really understanding why.
The no-thinking-required retirement plan
Many workplace retirement plans now automatically enroll employees, automatically set their contribution amount, and even automatically choose how the money is invested. Such automation is often viewed as successful because it increases overall plan participation. More participation is a good thing, yet many of those same plans are now having to take steps to prevent employees from borrowing against their plans.
Apparently, you can raise participation rates and build up investment accounts via automation, but whether that money sticks around long enough for the savers’ retirement is far from certain.
Another issue with automated 401(k) plans is that the automatic contribution rate starts out very low—sometimes 3% of the employee’s salary. Many employees never increase the amount, either assuming it must be the right amount or never really thinking it through.
Putting the cart before the horse
If automation is to work effectively, it can’t come first. Understanding our God-given identity and life purposes, and knowledgeably choosing daily financial priorities that are in sync with that identity and those purposes, must come first.
We need to embrace that God made us to be stewards of his resources, be clear about our God-given life purposes, and set our financial priorities in a way that reflects our identity—then, and only then, automation can be a very good thing. Identity, purpose, and priorities have to lead; automation has to follow.
Identity is the ultimate automation
Knowing who you are is the ultimate form of automation because it guides you in all sorts of decisions—financial and otherwise.
Newer believers may have to consciously ask themselves, “What would a steward of God’s resources do in this financial situation?” But the longer you live a life of faith, and the more God’s Word is written on your heart, the more your financial decisions will become natural, second nature, or something very close to automated.
What aspects of your financial life have you automated? How have you made sure that your identity, life purposes, and intentionally chosen financial priorities lead and automation follows?