Financial Stewardship vs. Wealth Management: What's the Difference? Blog Image

Like many other financial advisors and institutions, we at Astryr Wealth often remind people of the importance of wealth management, but something that we find really ties into our philosophies is financial stewardship. For those unfamiliar, financial stewardship refers to the management of finances to reach certain goals, typically in care of another person. While that may sound just like regular financial management, the key difference here is accountability. Let’s take a look at how financial stewardship differs from wealth management, as well as how you can pass down values, not just assets, to your family and loved ones.

What Does Financial Stewardship Mean?

As mentioned, a steward is someone who manages assets, especially financial affairs, for another person. What this means in the biblical sense is that our money isn’t exactly ours; rather it is what God has given us to manage. However, there is still an accountability to be had towards finances, even if it isn’t “ours.” In fact, appreciating every asset of our lives (our homes, the food we eat, even the people we spend time with) is honoring what has been given to us. Therefore, the same can be said about our finances.

How Does One Become a Financial Steward?

There are five key ways that one can begin practicing financial stewardship. It is quite similar to how one would practice any other financial management, except it tends to be more self reflective.

Stewardship is about more than just how we spend our money, it’s truly recognizing its value. Therefore, one of the first steps of financial stewardship is aligning your finances with your values. When you are analyzing your financial situation, do you feel gratitude towards what you have? Do you find yourself wishing you just had more? Do your investments align with your values? These are the questions you should first ask yourself.

Next, it’s time to create a budget based around your self reflection. When following financial stewardship, your goal isn’t to hoard wealth. Rather, it’s to use your resources wisely. A budget not only will help you live within your own means and achieve any financial goals, but you can also plan to donate to any charities or organizations close to your heart.

Speaking of which, you should never forget to give back when you can. According to the Bible, God has blessed his people so that they can be a blessing to others. Giving back through tithes and donations to your local missionaries, churches, ministry organizations, and any charity, for that matter, is a key way to do this.

Lastly, don’t forget to plan for the future. We don’t know what tomorrow will give us, so the best we can do is hope for the best and prepare for the worst. Short-term savings are perfect for emergencies, and long-term savings are for larger expenses you’d like to make in the future, such as a college fund, new home, etc. This future-proofing also lines with protecting yourself and your family. Having an emergency fund means that you can give yourself or your loved ones the best care needed in the unfortunate circumstance of illness or injury.

Long-Term Thinking Vs. Short-Term Accumulation

Now that we’ve discussed the ways you can become a financial steward, let’s hone in on one specific area of thinking that may be more difficult: focusing less on the short-term expenses. For example, a new electronic gadget, or the newest trendy clothing item. While it is nice to treat ourselves to a more frivolous purchase every once in a while, it’s important to keep in mind that our brains are wired to crave instant gratification. That is why it is so easy to accumulate so many random purchases: a long-term goal often feels too far away from now to give us that same feeling of satisfaction.

It’s not easy to realign your thinking to consider your long-term goals over short-term objects, but once you get into the habit, you will be thankful you had the extra room in your budget for your mortgage payments or retirement.

Remember: you don’t need to totally deprive yourself from a short-term purchase, just find that balance. If you want a basic start to balancing your spending, you can always follow the tried-and-true 50/30/20: 50% of your income towards necessities, 30% to more frivolous purchases, 20% to savings/investments. Of course, this will not be exact for everyone, but it is a solid start until you identify exactly what works for your lifestyle.