Save for emergencies, so you have resources to help care for needs during rainy days. A wise person stores a portion of his/her resources to meet future material needs, but a foolish person quickly spends everything he/she gets and engages debt obligations above his/her income that ensure all his/her future income gets sucked away and transferred to creditors for many years to come. The foolish are unable to build wealth because this pattern strips them of money in order to build creditors’ wealth and keep them in bondage.
You need an emergency / rainy-day fund to discipline you against unreasonable spending habits, to overcome bad economic cycles that will occur throughout your life, and to help you stop relying on debt to get you through problematic situations that require large infusions of money. Your main savings should be an emergency fund of at least $1,000 until you pay off all non-mortgage debts, unless more money may soon be needed because you are facing a situation like unemployment, impending layoff, or uncovered medical costs where without more available funds your necessary bills would go unpaid.
Put this money in an account that protects principle and interest earned, since it serves like an insurance policy that you need to make sure is available when an emergency occurs. Once all non-mortgage debt is paid off increase the fund to at least $10,000 which for most debt-free families will allow them to cover the emergency and/or three to six months of household expenses.
Invest excess disposable income to accumulate greater return. Investing should be a major initiative undertaken with a reasonable portion of savings (at least 10% of gross income) left over after all your budgetary expenses for each month have been paid. You should be looking for greater compound interest / exponential growth than you can get from accounts in which your emergency reserve funds are parked. God desires that you be like the servants in the Parable of the Talents and the Parable of the Minas who went about trading (investing) the assets He had given them in order to multiplying them for greater use for His glory and to care for themselves and their families and for establishing inheritances for their children’s children and future generations.
A simple place to invest a reasonable amount of income each month is no-load low-expense stock index mutual funds. These provide automatic diversification in each fund because they purchase hundreds or thousands of stocks of a variety of publicly traded companies in a variety of industries. Employer 401k type plans and brokerages like Vanguard, Fidelity, Charles Schwab, TIAA-CREF, etc. often require no more than $25 per paycheck or month to invest in one of their plans or funds. So, getting started is not difficult to do. You simply need to be committed and focused on doing the right thing concerning investing for your future.
Over long periods of time you will find historical data showing that the average annual growth of these no-load low-expense stock index mutual funds has far outpaced the growth / compound interest of other types of non-stock investment options. As you age, you may want to also have a portion of your money in fixed-income funds to provide principal protection during the time period of your life when you know you will need to continually draw money from these funds on which to live during your senior years.
Please pray for this ministry, email me with any questions, and contact me to speak at your business/ministry’s conference/workshop. May the LORD bless you richly as you follow His plan!
Proverbs 13:23, Proverbs 21:20, Matthew 25:14-30, Luke 19:12-27
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