Proverbs 22:27

Solomon taught risk management 3000 years before Harvard added a business school in 1908. Truth and wisdom do not depend on a socialist education, liberal professors, the case study method, textbooks with Keynes’ fantasies, MBA’s, CPA’s, or MTV. In fact, truth and wisdom are missed by these educational tools of educated fools! This should not surprise or discourage you, for what else do you expect from evolved monkeys!

What have the best and brightest brought us? The Great Depression, many recessions, boom-and-bust business cycles, insane fiscal and monetary policies, an unbelievable national debt, elimination of savings, obsession with spending, accounting fraud, and an epidemic of bankruptcies! This ancient proverb from heaven could have helped. Apply it to your own life, for business school graduates are too wise to learn (Pr 26:12,16).

Solomon wrote this proverb to give financial knowledge and discretion to young men (Pr 1:4). There is an impulsive temptation in men, especially young men, to take on more risk than they should. A greater fear of loss would save many young men from financial trouble or destruction. A more disciplined and patient approach to investing and career planning would also help. The lesson here is to minimize unnecessary risk.

The proverb has two halves. The first half identifies the financial error that results in the punishment here. It reads, “Be not thou one of them that strike hands, or of them that are sureties for debts” (Pr 22:26). Those who make foolish financial decisions or enter deals with potential danger or excessive risk are heading for serious pain and trouble. Solomon warned often against contingent liabilities (Pr 6:1-5; 11:15; 17:18; 20:16; 27:13).

Striking hands – we shake hands – settled deals back then. The issue here is being a surety for debts, which we call cosigning a loan or guaranteeing another’s performance. It is tempting to enter these contracts to help friends in financial transactions, so Solomon warned against them by describing a possible painful outcome – the creditors might repossess your bed! If you do not manage financial risk, it will eventually wipe you out.

Prudent men analyze potential danger and avoid it (Pr 22:3; 27:12). Fools bull ahead. It has been wisely said, Discretion is the better part of valor. There is nothing courageous or noble about a man who plunges into financial deals without careful, cautious, and pessimistic analysis. Even if other fools before him found success that way, it proves nothing; God judges such men with the prosperity of fools (Pr 1:32). An entrepreneurial spirit is only an asset when handcuffed to prudence. Wise men hate risk and avoid it.

Where have you created contingent liabilities – financial risks that might take away your bed? Are your life, health, house, and vehicles properly insured? Are you covered for liability judgments in a sue-happy generation? Do you speculate in financial derivatives like futures contracts or writing options? Have you put all your financial eggs in one basket, so if things do not work out you will be wiped out? Can you sleep on the floor?

Do you know to cut your losses short? It means to admit you are wrong and sell bad investments, close marginal businesses, or leave a dead end job. Do you smell the lie when terms are too good to be true? It means they are not true, and you are about to become a victim. It is much better to forgo some investment return than to risk not having your investment returned. How many loans have you cosigned? Get free (Pr 6:1-5)!

Avoid speculation. Reduce financial risk. Hate debt. Diversify. Protect capital. Insure important assets. Be knowledgeable. View the future with pessimism. Never bet the farm on anything. Do not believe above-market returns. Be content with ordinary returns. Work hard. Work smart. Save some of all income. Secure a transferable skill. Give God the glory for a wonderful proverb that can save you from much pain and possible disaster.