When TJ and I were first married, we had two priorities concerning our financial health:
- Create a spending plan
- Have an emergency fund of 3-6 months of living expenses
These priorities came from reading Austin Pryor’s Sound Mind Investing, the book which changed our family’s financial legacy for the better. I will probably never be rich, nor do I really care to be, but one thing I know for certain is that when God calls me into his office to give an account for how I spent every dime that He has given me, I can with a good conscious tell Him how I purposely spent, saved, invested and gave in accordance to how I felt He would. When I am explaining the sinful choices in my life before God, the last thing I need is another set of screw ups in my financial life. Seriously, if you haven’t read Sound Mind Investing you really need to.
I’ve heard some interesting reasons against having an emergency fund, and at the risk of sounding rude and offensive, they are nothing short of bull crap and a petty excuse for either not wanting to save (laziness) or having the inability to save (immaturity). The Scriptures are very clear about saving and even laud it as wise. (Proverbs 21:20) There are a few things that get me really fired up and hearing excuses against saving is one of them, especially from men with a wife and children.
Now that I’ve gotten that off my chest, here’s a story of an unfortunate event that happened to our family recently that made that emergency fund so vital to us. In the near three years of our marriage, we’ve never had to dip into our emergency fund… until now. Due to an unfortunate error in our 2008 tax filing, we received a substantial return when we shouldn’t have. In these incidences, you must return your refund and pay the penalty plus interest. In the end, the total bill was a whopping $8,236! To compound the problems even further, we had just spent the remaining amount of that refund to refinance our house just a few days before I received this news. The other portion we had already used for our Roth IRA and to help fund our anniversary trip in 2009. All in all the timing of this was pretty awful.
Thankfully this is when that emergency fund comes in handy. Instead of going into debt to pay this off or dipping into any of our retirement accounts, we were able to write the check and be done with it. Sadly this wipes out our savings, but it served its purpose dutifully.
But can you imagine what we would’ve done if we hadn’t had any kind of savings whatsoever? The token Christianese phrase that seems to apply here is “God will provide”. Yes, He probably will but in what form? In my lifetime, I have yet to see God rain down cash from the sky or there be a deposit in my PayPal account from Jesus. In most cases, God uses people to bless others in these types of situations. Not that I’m against people helping others in need, but why would I rely on that if I have the means to take care of myself? Rather than someone coming to help me, I’d much rather that person go help someone else that really needs it.
In this case, I’m ever-thankful for the advice that Sound Mind Investing provided. Having some cash for a rainy day sure was a good idea. Now we’re back to our second financial priority from three years ago and building back that emergency fund.