Think now about the context. God has allotted to you all this money and He is trusting you to carry out your responsibility as a good steward to use it wisely to glorify Him. He promised He would provide for your needs but in doing that, He has run into a timing issue. Some of the N’s on your cash flow sheet are very regular and fairly easy to estimate and predict. However, a few of the N’s are very irregular and very difficult to plan for. God knows about these of course but we don’t. For example, I now know how much it costs to go to the emergency room with a smashed nose. It costs $1000 after the insurance company has paid what it is going to pay. I now know what it costs to rebuild a transmission on a Chrysler mini van. It costs $2500. I now know it costs $120 to replace the spring on my garage door. There is no way I could have planned for these expenditures. However, I could have and should have (and did by the way) plan for what we call surprises or emergencies. I had enough saved in my emergency fund to cover each of these surprises when they occurred.
When you start saving, this is what you save for first, emergencies. But how much should you/we save for emergencies? I guess that depends on your current circumstances and what emergencies you might have. Are you married? How many children do you have? Where do you live? Etc. What if you lose your job? How long will it take to find another one and how much does it cost you to live monthly on a “hand-to-mouth” basis at the survival level? I’m going to stick my neck out and say you probably ought to have at least $1000 saved in your emergency fund but $2000+ would make me feel a lot better. There’s quite a difference of opinion among authors/experts on this subject. Some would say at least three months (survival) living expenses. Some would say six months expenses. I’ll let you decide but please do it and get busy saving.
I have had some people tell me that this is what they have credit cards for, emergencies. I can see a couple problems with that idea. First, an awful lot of people have their credit cards charged up to the limit already. Second, the interest rate on credit card debt is usually quit high. The current national average credit card interest rate is 17%.
Another reason to save is also a timing issue but a little different from the emergency situations I described above. In some ways it is easier to deal with because it is usually fairly regular and predictable. I’m talking about seasonal employment. There are some jobs that demand more time in some months of the year than others. The construction industry is certainly one. Farming is another unless of course you are a dairy farmer. The Prov 6:6 passage is a good Biblical example. A cash flow management plan (I’m not calling this a budget anymore) is especially important in dealing with seasonality of income.
The next question we need to address is where should we keep our emergency fund? Naturally we would want to keep it in a safe place where it can be retrieved easily and quickly. Not in a sock under your mattress or in a Tupperware container in the freezer. Those are easy to get to in an emergency but probably not as safe as they might be. The safest place to keep God’s money is in the bank or credit union in a “savings” account. These people will be delighted to have you put your emergency fund money in their institution and they have a variety of different types of “savings” accounts available. Not only that, they will even pay you (a little bit of interest) to do it. They won’t pay you very much but it will be better than nothing. I would recommend that you set up a separate account just for the emergency fund. Your assignment for this week is to go in to your bank or credit union or call or go online and find out what types of savings accounts they offer, how they work, what the various features are, what the rules are and how much interest they are willing to pay, etc. They might even have a single brochure that explains all this. In fact you might even want to go to another bank or credit union and see what they have to offer. There’s actually quite a bit of competition in the “banking” business.
You all get the idea of what we are doing here with the N’s and W’s. Last week I started to do a little preaching. Now I’m going to go to meddling and make a bunch of people mad. So far, I have left it up to you to classify the items on your cash flow sheet as to whether they are N’s or W’s. We don’t have to worry about the W’s but I sometimes have a hard time with the N’s. For example, I NEED a car. That’s a given isn’t it? Well maybe. But do I NEED two cars? Do I NEED three cars? When we lived in St. Louis Park, Minnesota (suburb of Minneapolis) I rode the bus downtown to my office every day. I must say I was scared to death the first few times but it turned out to be a really great thing. I got saved while we lived there and I read through the Bible the first time on the way to work and back every day. People thought I was nuts but I got to share the gospel with a few of them. It’s also a lot less expensive to ride the bus than to drive and park in downtown Minneapolis. Do you live on the bus line? Then there’s the question of what kind of car you NEED. While we lived in Minnesota I surrendered my passion for muscle cars (Olds 442 and boy was it fast) and bought my first family car (Dodge Polara 4dr sedan and boy was it ugly). What do you NEED your car for and would a Corolla or a an Escape do the job just as well as a Lexus or a Mercedes? I warned you I was going to meddle. You see right away why I don’t have very many friends, but I digress. We all NEED a place to live and God promised to provide our needed shelter. So, just out of curiosity I went out to one of those “for sale by owner” websites and did a little research. Let’s say you NEED a three bedroom house to meet the NEEDS of your family. On the website I visited, looking just at the city we live in, the spread between the most expensive and least expensive three bedroom house was right at $500,000. Was one “nicer” than the other? Of course but that’s not the point. I just want you to evaluate your N’s and try to see them from God’s perspective. Every time you make the purchase of an “N”, try to see it as just that, an N. Develop a taste for tap water. Stop driving through Starbucks on the way to work. Buy a coffee pot and a thermos. Quit smoking. I should have waited till now instead of quitting when I did in 1976. Cigarettes were only 25¢ a pack then. I could be saving so much more now that the current national average cost of cigarettes is $6.28 a pack. Yikes!! In case you are questioning whether or not smoking is a need, you haven’t smoked (and for heaven sake don’t start).