The next set of lessons in our series focuses on saving money. Whether you are just beginning to live by God’s financial principles or you are living a life of financial freedom, saving money is an essential part of that plan. The Bible encourages us to plan ahead and prepare for life’s unexpected surprises. When we establish a savings plan, we are obeying God’s Word. So let’s look at this month’s money lessons.
Money Lesson #5 Learning to Save
When you begin planning your family budget you must divide your expenses into two categories: fixed expenses and discretionary spending. Fixed expenses are bills that had to be paid every month—house payments, car payments, insurance payments, utility bills, etc. A set allotment of money for your savings account needs to be considered a fixed expense each month. Just like the government removes a percentage of your paycheck for taxes and you set aside 10% for tithing, you need to set aside a prescribed amount from each paycheck for your savings account.
Different financial advisors have varying suggestions for what percentage of your income should go into savings. Personally, I believe this should to be a matter of prayer. Ask the Holy Spirit to show you what amount He wants you to put into your savings account each month. He understands your financial circumstances, and He knows your future. If you and your family seek His wisdom, He will lead you to the proper amount. The key is making it a priority to keep your commitment and place that amount into your savings account every month.
You may be asking, “What’s the big deal about saving money? My budget is stretched already and I need to pay off my debts. Can’t this wait?” The answer is “NO!” This is a lesson our family learned many years ago as we were first learning to live by God’s financial principles. Although we were still learning to live on a budget and desperately trying to pay off our debts, we made a commitment to start a savings account.
At the time my Mom was acting as our family’s Chief Financial Officer. (This is the person who holds the main responsibility for the family’s financial affairs. They are responsible for planning the budget, making sure bills get paid, keeping track of family needs and managing the money.) She made a commitment that we would put a certain percentage of our money into a savings account. It was a priority. At first it seemed like an unnecessary burden. After all, the budget was already stretched to the limit by debt repayment. Then the day came when we all saw the value of the family savings account: The first unexpected emergency. Only it wasn’t a crisis because we had the money in the savings account to pay for it.
A savings account needs to be a priority in every person’s life. Your savings account is your first line of defense against credit cards and debt. It is your safety net when the unexpected happens. For example, let’s say you’ve decided to start living on a budget. You’re paying down your debt. Each week you limit yourself to spending only the money allotted to you. Then one day you’re driving to work and the car breaks down. The repairman says he can fix it for $500.00. You need the car to get to work, but you don’t have $500.00 in your budget for car repairs. If you don’t have any money in savings, you will be forced to put $500.00 on the credit card you’re trying to pay off. However, if you have a savings account to fall back on, you can pay the bill and go on with your life. It’s a new way of living: saving a little each month for the emergencies of life.
Many experts recommend that each person or family have 3 types of savings accounts. The first is the EMERGENCY FUND. This should be your first saving’s goal. The name describes it perfectly. It is money saved and reserved for emergencies. Again, you should ask the Holy Spirit how much He wants you to have in this fund. I read a magazine article that said it should be at least $500.00. The Holy Spirit may lead you to have $1000 or $2000 in your emergency fund. Whatever amount you decide, you should place your monthly allotment for savings in this emergency fund until your goal is met.
The next type of savings account you need to establish is a long-term emergency fund. This is money set aside to help you and your family survive a life crisis such as a job loss or a prolonged illness. Most experts say this account should contain 6-8 months worth of living expenses. Let’s be honest: you cannot develop this fund overnight. While it may take only a few months to establish an emergency fund, this is a long-term savings goal. Don’t let that discourage you. After you have met your goal for your emergency fund, put your monthly savings allotment into this fund. Over time, it will grow and you will meet this goal. Don’t give up because it takes too long. Celebrate each victory along the way. When you’ve saved enough for one month’s living expenses, celebrate it! You’ve done a great job! Look how far you’ve come from when you had no savings at all. Realistically, it will take awhile for you to meet this goal, but keep trying. Along the way, you are accumulating a savings account that will be there for you and your family during the hard times.
Finally, we need to establish a savings plan for our retirement. This is a savings account for your future. Many people do this through their employers or through a 401K. Because I am not a financial planner, I will not give any comments on this topic except to say that you should consult someone who understands it and can give you sound advice. As with all financial decisions, you should pray about your options. Also, make sure you thoroughly understand the decisions you are making. If you are married, include your spouse in the decision making process. After all, it is their future, too.