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Financial Principles
Understand the principles behind your financial decisions.
Stewardship is built on timeless truths. Most financial advice is centered on transactions, but Forging Foundations focuses on the process and the person behind the money.
Before you implementation a strategy, you must audit the foundational thinking that drives your behavior. Use the sections below to identify the problems in your current system and discover how to build with greater intention.
The Human Problems
A financial strategy is only as strong as the habits supporting it.
Even useful tools can produce disappointing results when spending habits, assumptions, and complacency go unexamined.
- Parkinson’s Law: Expenses tend to rise with income. We make room for saving and capitalization before increased income becomes increased lifestyle.
- The Arrival Syndrome: Believing we already know enough can stop us from learning. We remain willing to question familiar financial habits.
- Willie Sutton’s Law: Accumulated wealth attracts people seeking access to it. We pay attention to protection, fraud, and who we trust with financial decisions.
- The Golden Rule: In this financial context, whoever controls the capital has greater influence over the terms. This is distinct from the biblical Golden Rule. We build capital to strengthen our choices.
- Use It or Lose It: Understanding must become consistent practice. We reinforce sound habits through regular use, review, and teaching.
Ask yourself: Which of these habits or assumptions is most affecting my financial progress?
The Human Problems
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Fundamental Money Problems
Recognize the challenges before choosing the tools.
Everything in Life Is Financed
Every purchase requires capital. You either use someone else’s money or use your own.
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When you borrow, you pay for access to someone else’s capital. When you pay cash, you give up the future earnings and other opportunities that money could have supported. That opportunity cost is different from an interest charge, but it still deserves consideration.
Our approach: Look beyond the monthly payment. Consider the cost, access, and future use of your capital when deciding how to fund a purchase.
Ask yourself: When I spend money, what is my plan to rebuild the capital I used?
There Are Only Two Sources of Income
A useful starting point is to think in terms of people at work and money at work.
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Your work produces income through your time, skills, and effort. Accumulated capital can also produce income through assets and ownership. Some activities, such as running a business, involve both.
Our approach: Protect your ability to earn while intentionally building capital that can help support your family over time.
Ask yourself: How much of my household income depends on my continued ability to work?
The Banking Process
Money is continually being deposited, accumulated, lent, used, and repaid. Someone manages that process.
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You already participate as a depositor and, often, a borrower. Understanding the banking process means looking at who supplies the capital, who sets the terms, and where the financing dollars go.
Our approach: Build accessible capital and establish a disciplined process for using and replenishing it. Evaluate tools by how well they support that process.
Ask yourself: Who controls access to the money I depend on?
Build With Greater Intention
Apply the principles to the way your money works.
Rate vs. Volume
A percentage tells part of the story. The actual dollars involved help reveal the impact.
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A high return on a small amount may have less effect on your household than improving how you manage a much larger flow of money. Rates matter, and so do the amounts, timing, costs, and risks behind them.
Our approach: Examine the dollars earned, spent, saved, and paid in financing costs across your financial life.
Ask yourself: Am I giving more attention to a rate of return than to where most of my money goes?
Creating a Family Economy
Your family can develop an intentional system for earning, saving, using, and replenishing capital.
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A family economy connects financial decisions to shared priorities. It includes how you build reserves, fund needs and opportunities, restore capital, and teach the next generation to manage resources responsibly.
Our approach: Establish a repeatable cycle: Capitalize → Use or Deploy → Replenish & Restore Capital. Ownership and stewardship remain at the center. Purchases still have costs; replenishment prepares your family for what comes next.
Ask yourself: Are we building a system our family can understand and continue?
Thinking Long Range
Today’s decisions should support more than today’s needs.
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Building financial strength requires patience, consistent capitalization, and room for changing circumstances. A decision that looks attractive today may limit your options later.
Our approach: Consider immediate needs alongside future flexibility, family responsibilities, and the next generation.
Ask yourself: If I repeat today’s financial habits for the next 20 years, what will they produce?
Savings Versus Investing
Savings and investments serve different purposes. Both deserve a clear role.
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Savings generally prioritize preserving capital and keeping it available. Investing puts capital at risk in pursuit of growth or income. Money needed soon has a different job from money committed for the long term.
Our approach: Clarify the purpose, timing, and accessibility required for each dollar before choosing where to place it.
Ask yourself: Can I meet an unexpected expense without being forced to sell an investment at an unfavorable time?
Cash Flow vs. Net Worth
Net worth measures what you own minus what you owe. Cash flow shows how money moves through your life.
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A household can have substantial assets and still struggle to meet monthly obligations. Positive cash flow alone also does not guarantee lasting wealth. Both measures matter.
Our approach: Evaluate your balance sheet alongside income, expenses, debt payments, and access to capital. Build a structure that supports present responsibilities and future growth.
Ask yourself: Does my financial position give me usable flexibility, or does most of its value exist on paper?