This is Part 4, in a four part series, click HERE to read Part 1, HERE for Part 2 and HERE for Part 3.
What We’ve Covered
If you’ve been following this series, you’ve been with us as we’ve been covering aspects of God’s will for our finances. How He has a good plan and that we should find rest in Him regarding our finances, how He has called us to live generously, and how to steward our finances well through budgeting, as we are told to live wisely.
There is much more we could cover about finances, as so much of the Bible talks about stewardship and finances, but for the purpose of this series, we’ll end on what the Bible says regarding savings.
As we covered budgeting last month, we talked about how budgeting is the way you organize your finances for the fixed and variable expenses you face each and every day/week/month.
Savings has its own three specific goals which are to…
- Prepare for the unexpected (natural disaster, unexpected car repairs, unexpected health conditions or accidents, etc)
- Prepare for upcoming situations that will require you to live off of savings (such as retirement, a period of time where you won’t be working because of health, or something similar)
- Prepare for large purchases that require saving in advance (a car, house, or another large purchase)
As you can see, the similar thread in the goals for saving is the word “prepare”. Saving is a proactive action to get ready for a future event.
The Big Picture
As we cover this topic, you’ll see a theme of accumulating money, investing, and trying to make more money. This is because we’re specifically talking about how to save and invest money - but that doesn’t mean money should rule our lives.
Please do not take this post as an excuse to be all about money, and to forget that money is a gift from God and can be used as a tool to glorify God and to bless people. This post is specifically dealing with how to invest and save money so that it may grow and be used as a tool in a greater way in the future.
Don’t forget that we’ve covered other areas of money in this series dealing with specifically keeping a right heart before God and how to use it to bless others and glorify God. This post is merely dealing with the saving and investing aspect of money.
Savings In Scripture
We see throughout Scripture that it is wise to save and we are encouraged to do so.
- Through saving during 7 years of plenty, Joseph rescued all of Egypt and many of the surrounding areas from the next 7 years of famine (Genesis 41:34-57).
- Saving is seen as an act of the wise, while not saving is an act of the foolish (Proverbs 21:20, Proverbs 30:24-25)
- We’re told that we should not only invest, but diversify by investing in multiple areas (Ecclesiastes 11:2)
- We see examples of saving for a specific cause and goal (1 Corinthians 16:2)
- And we see how valuable it is to save, even little by little (Proverbs 13:11)
Saving Is Not A Command
Before we dive deeper into the topic of saving, I want to preface this with a reminder that saving is a wise thing to do, but it is not a command in the Bible.
This means that 99% of people should do it because it is simply wise, but I am not discounting that God may tell you not to.
Jesus certainly did not save money. There have been many godly men in women who have not saved money - and there have been just as many who have saved money.
Just as with many wise things in the Bible, saving should be our default action, but if God tells you to do something different, then you ought to do that.
With that said, most people do not save because of their decisions in life, and not because they truly feel that God has told them not to. If we have not felt that God has specifically told us not to save, then we should be living wisely and saving well.
The Dangers Of Saving
Like all of the good and wise things we are told to do in Scripture, and even the commands we have in Scripture, we can easily turn saving into a bad thing.
Throughout the Bible there are warnings against relying on things instead of God.
Now, just because you save doesn’t mean that you will fall into this trap, but it will increasingly become a danger.
If you remember the second part in this series, we actually talked about how generosity can be one of God’s built in safeguards for us against this danger.
So, let’s not discount savings as a dangerous thing, but let’s save with our eyes wide open and our hearts sensitive to keep God as our only true safety and security. In reality, we can make an idol out of our money whether we have $10 or $100,000 and so we need to focus on God rather than trying to keep our savings low.
Here is some scripture for you to ponder and even memorize as you continue to guard your heart against relying on things other than God:
- "Whoever trusts in his riches will fall, but the righteous will flourish like a green leaf." Proverbs 11:28
- "Take care... lest, when you have eaten and are full and have built good houses and live in them… then your heart be lifted up, and you forget the Lord your God…” Deuteronomy 8:11-19
- "But godliness with contentment is great gain… For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs." 1 Timothy 6:6-10
- “…Give me neither poverty nor riches… lest I be full and deny you and say, “Who is the Lord?…” Proverbs 30:8-9
Types of Savings
As Dave Ramsey (and many like him) teaches, there are multiple “types” of savings. Each for a different financial stage and for different purposes. The general breakdown is…
- Emergency fund (depends on your income level, but generally $1500-$3000)
- 3 month's worth of expenses
- 3-6 month’s worth of expenses (additional to the initial 3 months)
- “Safe" Investments (mutual funds, etc)
- “Risky” Investments (stocks, etc)
- Saving for specific items or purchases (home, car, vacation, etc)
Now, in general, it’s ideal to move down this list in order, though you can have some overlap of starting your retirement/401K (especially if you have a company that will match your 401K deposits) at the same time that you’re still building your 3 month's and 3-6 month’s worth of savings.
The Purpose Of Each Type Of Savings
The important thing to gain from this post is the mindset of what saving is used for and how it can specifically benefit you as a wise action. Without connecting your savings to a specific purpose, it’s much harder to save because it seems meaningless and unimportant.
Emergency fund: By having an emergency fund, you are able to handle the miscellaneous bumps of life such as a car accident, unexpected medical, etc.
3-9 Month’s worth of expenses: By specifically having this savings, you are able to handle larger potential life problems such as loss of job, and larger unexpected expenses. The benefit of having these separated from your emergency fund is you can put these savings into higher returning investments that can take up to a month to liquidate because you have your emergency fund prepared to last in the meantime.
Retirement/401K: After you have your day-to-day and short-term savings taken care of, it’s good to prepare for the future where you may not be able to work, or at least make as much money as you do now. Especially in today’s world with matching 401K plans, etc - retirement savings has become much easier, more useful and can be done well.
**”Safe” Investments”: Once your retirement is underway, you’re in a good position to start investing money rather than just saving it. It’s good to start with “safe” investments that don’t have as many “downs” where you might loose money, but tend to grow at a steady and smaller rate than “risky” investments. NOTE: I say “safe” and “risky” because technically no investment is “safe”. Just that some investments are naturally safer than others.
”Risky” Investments”: After you’ve started working with “safe” investments, you’re now in a good position to start with “risky” investments. The reason for this is that risky investments can bring much more lucrative, but they can also be a complete loss. The reason we wait until these other pieces are in place is that the money you use for these investments is not the money you need to live. It is unwise to use your “bread money” on risky investments, but to use “extra” money to try to produce more.
Saving for specific items or purchases: This one is the easiest to remember why we’re doing it, because when you save for that car, or house, etc there’s a specific goal in mind that helps you stay focused and on track.
Each of us will have different next steps based on how far we’ve come with savings this far.
For many of us, this journey needs to begin with starting an emergency fund and simply having savings in the bank. For others, you will be able to start further down the road of saving.
Regardless of your next saving step, please do not forget what we’ve already covered. Saving is one piece of a wholistic plan that God has for our finances that are meant to complement generosity and budgeting.
I encourage you to take time to review through the other posts in this series and make a plan.
And all along the way, have God be the focus. Do not let money, or any other area of life, take place over Jesus in your life as your Lord and Savior.
I especially encourage you to go back to where we started this series. You can read part one at this link.
God can (and should) be our hope regardless of which financial stage you are in.
So let us seek Him, obey Him, and most of all: trust in Him.