While the old axiom states that nothing is so certain as death and taxes, it may be equally true to say that if we live long enough we will experience a crisis.   Many readers recall living through the Great Recession of 2007/2008.   Others have experienced 9/11 or the dot.com bubble of 2000, and for older readers, prior economic recessions.   And we all have been going through – and will eventually come out of – the coronavirus pandemic, aka the Great Lockdown.

 The next difficulty could be another economic crisis, or a more personal challenge, such as loss of a job or a health emergency.  While we acknowledge our finiteness and God’s omniscience (Psalm 90: 10; I Corinthians 2:11b; Psalm 139; Romans 11:33), we can each nonetheless make some preparations for whatever that next crisis might be.  The purpose of this post is to discuss some ways to be better prepared financially, whatever and whenever that is.

Create a robust emergency savings fund.   By definition, emergencies are unplanned. Have you ever seen a calendar with ‘emergency’ noted with date and time?    What makes any type of emergency even worse is if it also becomes a financial emergency.   A recent Federal Reserve Study about personal finances showed that close to 40% of those surveyed do not have $400 in cash if needed for an unplanned expense.  Further, 27% would borrow or sell something to pay the expense and 12% admitted to not being able to pay the expense at all.  A 2020 National Payroll Week survey of over 34,000 individuals indicate that almost 70% of respondents indicate that they would have a somewhat or very difficult time meeting current financial obligations if their next paycheck was delayed for even a week. This reality of the average US consumer having insufficient savings is unfortunately all too common.  

This general lack of preparedness is in stark contrast to what financial advisors suggest:  a minimum of $1,000 in an emergency fund, with a goal of having sufficient funds to cover 3-4 months living expenses.  Burton Malkiel, author of Random Walk down Wall Street (a classic in investing and markets – now in its ninth edition) discusses the importance of cash reserves in an April 2020 Wall Street Journal article (full article here): 

“The unprecedented disruptions caused by the coronavirus underscore the absolute necessity of having a precautionary cash reserve of at least three month’s living expense to help pay for unexpected medical bills and provide a cushion during a period of unemployment.   If you are not adequately covered by medical insurance, or if you work in the gig economy…the reserve needs to be larger.”

Continue to give.   Crises are not a reason to stop being generous.  We ought to be in the habit of giving on a periodic and faithful basis.  Giving is the one way we can ‘spend’ our money that is others-focused.  Practically, it loosens our grip on the resources we have.  God encourages us to give (II Corinthians 8:3-15; II Corinthians 9:7; I Corinthians 16:1-2; Proverbs 22:9).  We have the example of the Macedonian church (II Corinthians 8) and the widow (Mark 12), who both gave out of their poverty.   

Be able to reduce your spending significantly if needed.   When that next emergency comes, there may be a need to learn to live on less.    Before that emergency is the time to prepare and plan steps that you could take, should the need arise.   To be able to live on less, we need to know our current spending patterns and rates.  Tracking current spending as well as having a spending plan provides informed preparedness for both the present and future.

Get out of debt.  Many know the proverb: “The rich rule over the poor, and the borrower is servant to the lender “(Proverbs 22:7).   In a sense, taking on debt is making a financial vow.  Scripture speaks of the gravity of making vows and the value of keeping our word (James 5:12).  Further, the taking on of debt and its attendant payments presumes upon the future. We know not what tomorrow will bring (James 4:13-14).   Less is better than more when it comes to personal debt.

Develop a stewardship mindset. God is the ultimate owner of all creation (Psalm 24:1; 50:10; Haggai 2:8) and we are stewards. Our charge is to be good stewards/agents of what God has provided to our care during this earthly life (I Corinthians 4:1-2).   Having a steward mindset orders our financial affairs rightly.

Each of the above suggestions is perhaps not ‘rocket science’ or a scintillating news flash.  However, we can take some steps now to be better prepared for the future; both times of both normality and uncertainty.