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Stewards Wisely Plan for Personal Finance Risk, Recovery and Growth

Determine your personal finance risk tolerance before your insurance and investments

Living is full of risk that threatens our safety, security and contentment. I think God set it up that way so that we would have to learn how to depend on Him in faith though life’s tough times when risks become trials, challenges and disasters. Disasters can be weather-related, man-made, economic, or a combination of all three. We have to persevere through disasters and recover from them. So in America, we created insurance and investments to help us recover faster at less personal finance risk. As a result, we pay for things that rarely happen, if ever. But when they do, they can be catastrophic to us and our families for generations to come. Let’s take a different look at risk and insurance and investments, through God’s word to us in Proverbs 22:3.

Freeclimbing woman embracing personal finance risk
Are you running your personal finance risk like this freeclimbing woman, comfortable taking big risks? Or would you rather have ropes and a helmet?

A prudent person sees evil and hides himself, But the naive proceed, and pay the penalty. NASB
The clever see danger and hide; but the simple go on, and suffer for it. NRSV

Same verse, different translations, nuanced meanings. Let’s break it down:


The person who is wise/prudent/clever sees bad things/evil/danger on the way and prepares/hides/covers/protects themselves. The person who lives clueless/naïve/simple/ignorant just goes on living how they want, and they will get burned/pay the price/suffer as a result.


As faithful stewards of what God has trusted to us, we actually do need to prepare for the worst and hope for the best. That means we live by faith in action. We do not react out of fear. We think positively about the future because we are content knowing that we are as prepared as possible to recover from bad things that can happen. We don’t live worried about will happen because there is never enough – a lack victim mindset. We do live expectantly because there is an abundance of blessings from God – a possibility stewardship mindset. Think about your own mindset about this risk tolerance balance. Are you negative, pessimistic, victimized? Or are you positive, hopeful, blessed?

Risk and Recovery - Insurance

Insurance is our disaster recovery plan. Insurance does not reduce the risk or prevent the disaster. This is a misconception. Insurance helps us to rebound and recover from the disaster. Insurance reduces the impact on our finances that the disaster causes. It does not reduce the risk frequency of a disaster happening. It does not reduce the risk impact when the disaster happens.


Think about your home insurance. Natural disasters and fires that destroy houses actually happen less often now than 100 years ago. But we hear about them more often because we have a wider reach of news information available to us. We watch disasters live as they happen anywhere in the world! Now how much home insurance do you have? How much do you need? An insurance agent will tell you to get the amount of insurance that will replace the home if you had to build it from scratch and fill it with all of your possessions again. Others tell you to get the amount of insurance that equals what the home is currently worth on the market; what you would charge as a price if you were selling the home. You get to decide how much insurance to buy, what your deductible (out of pocket) will be on each claim, and how much you want to spend on insurance. But when you do, consider this – what is the wisest option for you to sleep at night, fit your monthly spending budget, and be able to recover from total loss? This mindset – peace, budget, recovery – is a wise perspective for all of your insurances: life, home, auto, medical, lost-time injury, etc.

Risk and Rewards - Investments

Investments are rewards for wise stewardship of the resources God provides us. There are many ways to invest your savings and make money work for you (instead of the bank). Investing can be risky from our limited perspective – we cannot see the future. We have to trust God’s plan and timing to see the harvest, and know when to reap the harvest. Ask yourself these questions about your investment risk, and rate your answers on a scale of 1-5, with 1 being low risk tolerance and 5 being high risk tolerance:

  • How much risk do you generally take in life? (think safety equipment, bug spray, sunscreen, defensive driving, alcohol use, helmet use, etc.)

  • How much risk can you tolerate in your financial investments and large purchases, and still sleep at night without anxiety? (think retirement funds, home mortgages and improvements, vehicles,

  • If you’re married, how much risk do you accept together? (Your risk tolerance levels may be significantly different, and you will need to reconcile them.)


Add your three numbers together. Now that you know your risk tolerance, compare your score to the investments/risk scale chart below. These basic investment options are based on your risk tolerance score when you add your three responses together. This is a general exercise to give you an idea to think about, not a hard and fast rule.


0 Savings Account

1 Money Market Account

2 Certificates of Deposit (CDs)

3 Government Bonds

4 Corporate Bonds

5 Gold / Precious Metals

6 Exchange Traded Funds (ETFs)

7 Mutual Funds

8 Corporate Stocks

9 Stock Options

10 Real Estate (living, flipping, renting)

11 Venture Capital

12 Cryptocurrency

13 Sports Betting

14 Gambling

15 Lotteries            

Now that you have an idea about your risk comfort zone, start from the top and move down the list. If you have not invested before, don’t just jump into the deep water at your maximum risk tolerance. Work your way down the list. Let’s say your risk tolerance is 6, at ETFs. First, make sure you have 6 months of savings in your account. Then put 3 months of that savings in a money market account making 3-5% annual interest. Then invest in a 6-month CD. Then open an investment account, and invest in bonds, precious metals, and ETFs. Use ETFs in your IRA. Then stop! That’s where you are most comfortable at night. Don’t invest in more if you are afraid to lose money. All investments will ebb and flow, but levels 1-4 are backed by guarantees.


This is the big reason to invest: annual inflation increases the cost of living as companies increase the product prices. From candy bars to fancy cars, everything increases in price every year to increase profits that (theoretically) company shareholders receive back in profits and stock price increases. Here’s the key to remember – average annual inflation is 5%, so your investments should make 5% annually just to break even. If you do NOT invest, you lose 5% of your buying power every year. Snooze you lose! Get comfortable with being uncomfortable at 5% at least. In this way, investments earnings prepare us and protect us from inflation loss, just like Proverbs says.

If you would like to explore your risk tolerance, insurance options and investments, book a no-obligation Discovery Call with a financial coach. As coaches, we do not sell insurance or investments, or recommend companies to contact. Coaches help you decide what you want to do before you contact the company sales reps. Get coached up today!

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