Five Stages to Financial Peace


We believe there are five stages on the path to financial peace.  For best results, the below stages should be achieved sequentially as you move from one stage to the next.


Stage 1: Save one month’s expenses in checking account

A 2017 CareerBuilder survey found that nearly 80% of American workers live paycheck to paycheck.  As in any multi-stage process, the first stage is your financial foundation.  It is designed to create breathing room in your cash flow.

A full month’s worth of expenses of cash in your checking account will avoid living paycheck-to-paycheck, eliminate the reliance on debt to meet everyday expenses, and reduce daily financial pressures allowing you to sleep better.

Stage 2: Eliminate all consumer debt excluding mortgage(s)

After you have some cash in the bank, it is time to knock out your consumer debt.  This means credit cards, personal loans, vehicle loans, payday loans, and student loans.  Having a plan to pay off debt will dramatically increase your financial peace.

Financially, it will reduce wasted interest expenses.  Emotionally, it will improve your relationships and mental health. Spiritually, it will help set you free.  Remember: debt is a thief!

Stage 3: Save 3 – 9 months’ expenses in a Life Fund

Now that the debt is paid off, it’s time to reinforce the cash reserves.  A 2017 study conducted by the Federal Reserve Board found that almost half of American households could not cover an unexpected expense of $400.

Stage 3 is designed to meet the larger, unexpected expenses of life.  Some people call them emergencies, but the person who takes control of their financial peace calls these occurrences LIFE!  Sooner or later, life will happen to you, too.  Appliances will bust, roofs will leak, kids will need braces, layoffs will happen, and cars will need major repairs.  Those aren’t emergencies – they’re just LIFE.

Depending on your personal situation, it is advisable to keep 3 – 9 months’ worth of expenses in a separate bank account to prepare for the unknown.

Stage 4: Save for long-term goals

In this stage, we turn our financial attention to creating and growing the things we care about most.  Among other things, this stage is when we save to buy a home, start a business, educate kids, and build retirement funds.  It is the reward for the completion of the first three stages. 

The building blocks of peace are in place, and now we can strive toward the goals of greater impact and influence.  This is also a time of legacy creation and planning for those we leave behind.  Be sensitive to the Lord as you consider these goals.  As you dream about your future, weigh your heart’s motivations and ensure you’re setting godly goals in which He would be pleased to partner with you to accomplish them.

Stage 5: Radical generosity

It may surprise you to see radical generosity listed as the last stage to financial peace.  We are not advising that you suspend giving until you have made it through the first four stages.  We belive giving is beneficial in every stage!  

Prayerfully, we advise you to invite the Lord into your finances and build giving into your budget regardless of which stage you find yourself currently.  However, once your savings targets for your most important long-term financial goals are being met in Stage 4, it opens the door for radical generosity.  You now have cash in the bank, you’re debt-free, and you have a wise savings plan to fund your long-term goals. 

You should be experiencing peace!

At this point, if you're a Christian, we recommend that you ask the Lord what to do!  The Lord encourages us to be generous and have a thoughtful giving plan.  When we give, it should be done with a cheerful heart, not out of obligation or legalism.