Ok, it's been a few months since my last post on this topic partly because we've had so much going on and partly because this part seemed far too easy to write after part 2. If you're just joining me in this series, please go to the beginning. You'll find the link in my sidebar under "In Relation To". I hope what I've shared so far has sunk in for you and that you're ready to talk about the second 10 in the 10/10/80 model.
"What about saving for the rainy day?"
When you hear the word "savings" what comes to your mind? The account tied to your checking that only has the required $25 in it (or $100 if you bank at some Credit Unions)? Maybe your 401K plan? Perhaps it's a prized collection of stamps that you hope to cash in for millions when you retire. What about that change jar on your nightstand or that health savings account you chunk money into every month? Whatever we think of, most of us believe we should save something. Obviously by my list above, not all saving is equal and therefore we can potentially divide the broad concept of "saving" into at least two separate categories: Expected and Unexpected
The Expected
This is probably the category we most associate with "saving". With things like retirement, college and vacations, just to name a few, we all know that we should be saving. We can find scripture to back us up on this as well:
Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest. Proverbs 6:6-8
I'm not going to go into how much you should save for this category but the rule of thumb is 10%. I don't study the economy so I can't tell you how much you'll need for retirement or college or your family vacations. I just know that if you do plan to have any of these as an expense, it's probably a good idea to start saving sooner rather than later. Most expected savings would likely benefit from some type of investing plan as well. God gave us a brain and we really should use it. It is definitely good stewardship to have some of the money He's given you, working for you.
The Unexpected
You know what this is. It's that blown tire you weren't expecting. It's the broken window that resulted from your son seeing how far he could throw a brick. It's that trip to the emergency room because your daughter took a softball to the nose during practice. It's the broken washing machine, overheating vacuum cleaner and that cell phone you accidentally washed (in the broken washer). It's that pink slip you got on Friday, the $100 reference book your kid borrowed from the library...and lost and your neighbors flowerbed that your dog felt inclined to dig up. You can call this an emergency fund, contingency fund or "holy cow, how did that happen" fund. The bottom line is that life is going to send some trials your way and odds are that at least half of them are going to cost you money. You need to have something set aside for this. Some say it should be three month's salary, some say it should be more (or less). You have to decide what you are comfortable with and then begin working to build your savings up to that level. Even if you can only set aside $5 a month right now, do it and then do not touch that money unless it's an emergency.
Now to talk about the ugly side of savings.... The Hording Greed Monster. About this time last year we actually began putting money aside for the "unexpected". We'd been placing money into our 401K for years (albeit not enough) but we'd never really had much of an emergency fund. I can tell you that there were months that I have had to fight the urge to deposit into that growing fund what God had convicted us to give away. I'd love to say that we've always been obedient to the Lord with our money, we definitely haven't but we are really working at it more lately than ever before. I mentioned in the first post of this series that I loved collecting money as a kid and would get quite heartless over it all too. Having an emergency fund has definitely helped with some of the pressure but we cannot allow it to give us false security or the opposite....craving more. These two extremes are not healthy and can actually do you more harm than good. What God has told you to give away....give it away. What God tells you to save....save it. You won't have any clue what He desires for you in this area unless you seek Him on the matter. It may just be that He tells you to give it all away and rely completely on Him to provide for your every need....He will never tell you to horde it so if you are having feelings of that sort you are way out of line.
As you'll notice, I didn't give you a percentage for the Unexpected category of savings - this is because it actually should come from your final 80% of the 10/10/80 equation. This means that you will need to know what your budget for that last 80% is before you can truly know how much you are able to set aside for your emergency fund. Next time we'll ask...
"Is a Spending Plan Necessary?"