With each day’s headlines, it’s easy to become anxious about your personal financial circumstances. That’s especially true if you’re walking a financial tightrope from one paycheck to the next without the safety net of an emergency/saving fund and a solid investing strategy.
I sometimes reflect on hearing of families facing significant financial challenges, and I’m reminded of an unexpected storm I found myself in. My storm arrived in the form of a phone call one September almost 30 years ago. My father’s medical tests had revealed the dreaded six letter word — c-a-n-c-e-r.
The prognosis was bleak and Dad was a widower, so within hours I was saying goodbye to my husband and teenage sons and boarding a plane to Florida to be by his side.
As events unfolded, Florida became my home for most of the next five months. Without warning, our two-income family was reduced to one income. This, along with the extra travel and personal expenses, completely drained our emergency fund.
I’m not complaining — I’m grateful I could care for my father. I’m also thankful we had an emergency fund to rely on. Prioritizing savings for our family eased some stress during this challenging time.
One of my responsibilities at SMI during the the 10+ years I worked there was answering member questions on the Reader Services line. Many times, I had the opportunity to emphasize to others the importance of having a savings fund in place, readily available in an emergency. I had no idea that events would unfold in such a way that my own family would especially need our emergency savings. Thankfully, I had “practiced what I preached” and carefully followed the financial advice and strategies set forth by Sound Mind Investing.
That experience led me to reflect on what a blessing SMI has been to our family over the years. Truth be told, before becoming SMI members we not only had no emergency fund and were in debt, we weren’t even taking full advantage of employer matching contributions to my husband’s 401(k). Was our lack of financial health because we didn’t have enough money? No. It was because we lacked a plan to guide us. Each week’s income was spent without thought or self-control.
All this changed when we became SMI members and the opportunity opened up for me to join the SMI team. My husband Rob and I began applying all the wisdom provided through SMI. Month after month, we progressively made the sacrifices needed to build our emergency savings.
Our lack of control shifted to self-control as we embraced the scriptural truth that Sound Mind Investing is based on: “For God has not given us a spirit of fear but of power, and of love, and of a sound mind” (2 Timothy 1:7).
A strong foundation
Over the years, by utilizing the many tools and articles SMI provides, we’ve been able to wisely invest the resources the Lord has entrusted to us. However, I see SMI as not just a reliable guide to building an investment portfolio but also as a helper in establishing a strong financial foundation through “sound mind saving.”
So let me encourage you to take a fresh look at your entire financial plan, including your savings strategy. Consider these questions:
Are you setting aside money each month for emergency savings and other needs, such as major purchases? (Saving monthly is smart, even if you haven’t fully paid off your consumer debts.)
Is your target amount for emergency savings enough to sustain your family through three to six months of difficulty?
Have you shopped around to find the best interest rates on bank savings, CDs, and money-market mutual funds?
If you’ve used your savings for an emergency, have you prioritized replenishing your fund?
On that last point, I want to stress that maintaining a robust savings reserve is an ongoing project! Although it wasn’t easy, Rob and I made the necessary sacrifices 30 years ago to rebuild our emergency fund after it was depleted during Dad’s illness. We were keenly aware that another financial storm could arise at any time.
Unexpected phone calls come, companies lay off workers, cars and refrigerators break down, and family members get sick. Things we hope won’t happen sometimes do. It’s wise to be prepared — both spiritually and financially.
In the Sermon on the Mount, Jesus said, “[E]veryone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the wind blew and beat against the house; but it did not fall, because it had its foundation on the rock” (Matthew 7:24-27).
The house of the wise
I certainly encourage you to apply the investing-related wisdom found in the SMI newsletter and on the SMI website. But don’t overlook the importance of steady saving! When a financial storm strikes, a robust savings reserve is like having “storm insurance.”
Put into practice the timeless counsel of Proverbs 24:3-4, “By wisdom a house is built, and through understanding it is established, through knowledge its rooms are filled with rare and beautiful treasures.”
