Money Management Day 5: Saving and Investing
But if anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever. (1 Timothy 5:8, ESV)
Go to the ant, O sluggard: consider her ways, and be wise. Without having any chief, officer, or ruler, she prepares her bread in summer and gathers her food in harvest. (Proverbs 6:6-8, ESV)
When it comes to saving, Americans are not quite up to the rest of the world’s standard. Historically, Americans only save about 5% or less of their income, even when considering that the United States has one of the highest household income rates in the world. You may think that 5% sounds pretty good, but according to MarketWatch, when compared with countries like Luxembourg at 17%, Switzerland at 18%, Sweden at 16%, Germany at 10%, Australia at 9%, etc., the savings rate in the United States is relatively low. The economic crisis associated with the worldwide Coronavirus pandemic, likely with the Great Recession of 2008 in the back of their minds, has actually caused Americans to save more in recent years than before. In fact, Americans are forecasted to save about 8-9% of their income in 2021, almost double the savings rate of 2016!
The verses chosen for this study are two of my favorite Bible verses about saving. The first one in 1 Timothy 5:8 deals with one motivation to save: taking care of your family. Paul writes that one who does not provide for his relatives, and especially those in his own household, is worse than an unbeliever. The verses in Proverbs 6 deal with another motivation to save: because life is unpredictable. The Psalmist is rebuking a lazy person and tells him to go to the ant and see how she conducts business. The ant has no physically present leader and yet works with initiative and foresight, gathering food in the harvest to prepare for the barren season when food will not be as plentiful. There are good and bad financial seasons in our life, and doing a little saving now can help tremendously down the road.
I prefer to have an account for short-term savings and an account for long-term savings. The short-term savings account is just our joint checking account. There is a small cash buffer in the account that stays there until there is an immediate need that comes up (new tires, medical bill, etc.) and our monthly earnings are not enough to cover the expense. We also have a long-term savings (money market) account that has a higher balance in it for larger, unplanned expenses that could come up (car dies, HVAC unit needs replacing, roof is leaking, etc.). Some people say that you should keep 3-6 months of expenses in an account like this in case you lose your job or something catastrophic happens to you or your family. We have tapped into these reserves a few times over the years and are very thankful they have kept us from having to go into debt to cover emergencies.
Another long-term saving method recommended is a retirement account. I have a 401k through work to which I contribute monthly with the goal of being able to retire one day. One piece of advice here: if your company offers a contribution match of any kind, take advantage of it ASAP! Even if you are only able to contribute the minimum, do it. Where else are you going to immediately double your money? There are other investment vehicles and emergency options, like Roth IRAs, 529 plans, HSA accounts, life insurance, etc., that can all help you with your saving and investing goals. Prayerfully consider your options and be a good steward of what God has blessed you with.
One important caveat when it comes to saving and investing is not to hoard wealth. Going back to day 3 of this study, the best investment you can make is giving. Yes, we absolutely should make sure that our families are taken care of, but it is important to not get too carried away in building up material possessions. The Lord Jesus said in Matthew 6:19, “Do not lay up for yourselves treasures on earth, where moth and rust destroy.” Instead, we should lay up treasures in Heaven where an eternal reward will be incorruptible. Financial freedom is great, but true freedom comes from having the peace of mind that only comes from trusting Him.
“We make a living by what we get, but we make a life by what we give.” – Winston Churchill