What have you learned about yourself and your household finances in this season? What does God have to say to you about your financial life?
A 2019 study by the Federal Reserve revealed that 40% of Americans would not be able to come up with $400 in a financial emergency. The quarantine hit many completely unprepared for the loss of steady paychecks. Why do so many find it so hard to save? Part of the problem is low income—there isn’t room in the budget to accumulate an emergency fund. Yet another slice of the problem is more personal—many don’t know how to start. They want to, but it seems intimidating.
Educate yourself. “Buy truth and do not sell it, get wisdom and instruction and understanding” (Proverbs 23:23) Just one small change in your habits can make a big difference. Here are a few simple ideas:
Sit down with your debit card statement for the month before quarantine and rank all your purchases in priority: high, medium or low. Pick one of the low priority expenses you could eliminate for a few months until you build up an emergency savings account.
Designate unexpected income for your emergency savings. Many auto insurance companies have given significant rebates on their rates during quarantine—think of this as unexpected income and save it.
During quarantine, some expenses have disappeared like meals out, shopping, and entertainment. Maybe you have discovered that these things really didn’t add much value to your life. Re-direct those funds into savings.
In cleaning out your closet and basement you’ve found valuable items you don’t use any more but you could sell online. The proceeds could fatten your thin emergency fund.
If you are paid biweekly you get two paychecks a month. But 2 months out of the year you will get 3 paychecks. Bank these “3rd paychecks” for a season until your emergency fund is built up.
Have a Financial Plan: "The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty." (Proverbs 21:5) It’s been said, “Give a job to every dollar you have.” If your dollars don’t have a job to do, they just disappear. If a dollar comes into your house, it should be given a job e.g. groceries, rent, vacation, clothes, Christmas gifts, tithe, savings and etc. None of us would ever hire a worker and not give them a job description! Think of your dollars as your very own employees. Give each of them something to do or they will leave you to work for somebody else!
Don’t pursue pleasure: "He who loves pleasure will become a poor man; he who loves wine and oil will not become rich." (Proverbs 21:17) We’ve all had enough down time to re-evaluate where we’ve been spending our time and our attention. We’ve rediscovered some simple pleasures of a slower moving day, more meals together with family and being able to complete some home improvements. Maybe we’ve come to realize that pleasure is not to be found in the things we were so frantically seeking. Maybe with the Apostle Paul “we have learned in whatever situation we are in to be content.” (Philippians 4:11) This could have a huge impact on our financial life—if we hold firm in our minds just how little it takes to be content.
What have you learned about your financial life in this pandemic? What pre-quarantine habits will you leave behind? What new practices are you committing to now? Write these lessons down. Talk about them with your household. Resolve not to let them be forgotten.