Money and Wealth (Part 7) - Saving (Part B)

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Money and Wealth (Part 7) - Saving (Part B) 2. Why save? A. We must be good stewards of what God has given us.  i. Saving and investing money is commended by God (Mat 25:14-30; Luk 19:12-27). ii. A fool spends everything he makes (Pro 21:20). iii. An even bigger fool spends more than he makes (going into debt). iv. Strong men retain riches (Pro 11:16). v. If you send everything you make, you are demonstrating that you are a weak, foolish person. B. It is wise and godly to save money and not spend everything we make. i. We should give a portion of our income to God (Pro 3:9-10; 1Co 9:7-14). ii. We should save for a rainy day and for retirement. (i) Go to the ant, thou sluggard (Pro 6:6-9; Pro 30:25). (ii) Why do ants know to lay up in store for the future, but most Americans don't? (iii)The following statistics are from 2015. American Family Financial Statistics Data Average American family savings account balance $3,950 Percent of working Americans who are not saving for retirement 40% Percent of American families who have no savings at all 25% Average amount saved for retirement $35,000 Average American household debt $117,951 Average American family home value $160,000 Average amount owed on home mortgage $95,000 Average American household annual income $43,000 Average credit card debt $2,200 Percent of American workers who postponed their retirement age this year 24% Percent surveyed who are very confident about having enough money for 18% retirement Percent of American adults who do not have a bank account 7.7% Percent of American adults who have an emergency fund to fall back on 38% (American Family Financial Statistics, Statistic Brain Research Institute, April 27, 2015) C. The following is from 1996, and, as you can see, things have only gotten worse in the last 30 years. i. “The median (typical) household in America has a net worth of less than $15,000, excluding home equity. Factor out equity in motor vehicles, furniture, and such, and guess what? More often than not the household has zero financial assets, such as stocks and bonds. How long could the average American household survive economically without a monthly check from an employer? Perhaps a month or two in most cases. Even those in the top quintile are not really wealthy. Their median household net worth is less than $150,000. Excluding home equity, the median net worth for this group falls to less than $60,000. And what about our senior citizens? Without Social Security benefits, almost one-half of Americans over sixty-five would live in poverty.” (Thomas J. Stanley, The Millionaire Next Door, p. 2) D. "A report from Interest.com, part of financial website Bankrate.com (NYSE: RATE), finds the median household savings nationwide is zero despite the average American having $668 left over each month after paying their bills. The site analyzed data from the Bureau of Labor Statistics and found that consumers are spending the leftover cash." (Median American Savings: $0, Fox Business, May 14, 2014) E. The following statistics are from 2024. i. A recent Ramsey survey on the state of personal finance in America in Q3 2024 reported the following:  50% of Americans said they’re prepared financially for a recession.  1 in 10 U.S. adults are investing 15% or more, and 50% aren’t investing any money at all.  49% of U.S. adults reported some difficulty paying bills, and 1 in 3 Americans (34%) were late on a bill payment in the last 90 days.  36% of Americans said their debt load increased in the past three months, and 34% said they are now carrying more than $10,000 in consumer debt.  Over half of Americans (54%) said they have accepted that debt is simply a way of life and no big deal.  On average, Americans plan to spend nearly $800 on gifts this coming holiday season.  Over half of U.S. adults (54%) said they will make a budget for their holiday spending.  35% of Americans said they probably won’t be able to afford their holiday spending and will use credit cards to make up the difference. (The State of Personal Finance in America Q3 2024, Ramsey Solutions, 10-18-2024) ii. From the Federal Reserve Bank of New York:  “Household Debt Ticks Up to $17.80 Trillion in Second Quarter; Mortgage Originations Remain Low. Total household debt rose by $109 billion to reach $17.80 trillion, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances were up $77 billion to reach $12.52 trillion, while auto loans increased by $10 billion to reach $1.63 trillion and credit card balances increased by $27 billion to reach $1.14 trillion. The volume of mortgage originations remained low, primarily due to subdued refinancing activity. Homeowners continued to increase balances on home equity lines of credit (HELOC) as an alternative way to extract home equity; HELOC limits rose by $3 billion, marking the ninth consecutive quarterly increase.” (Household Debt and Credit Report - Q2 2024, Federal Reserve Bank of New York) iii. From a Radical Fire article:   54% of Americans Live Paycheck to Paycheck - According to a PYMNTS and LendingClub survey, 54% of Americans live paycheck to paycheck. In addition to that, 40% of people earning more than $100,000 per year said they lived paycheck to paycheck as well.  61% of Americans Struggle to Pay a $1,000 Emergency  Only 24% of Millennials Have Basic Financial Literacy  21% of Americans Don’t Save Anything of Their Annual Income  1 in 3 Americans Have Saved $0 For Retirement - 56% have less than $10,000 saved for retirement. 33% of Americans have nothing saved for retirement. (Marjolein Dilven, 5 Scary Financial Statistics [& How To Avoid Them], Radical Fire, 5-31-2023) iv. “A recent MarketWatch Guides survey found that 66.2% of Americans feel they’re living paycheck-to-paycheck. The same survey found that of the 48.6% of respondents who reported being broke, 92.1% were living paycheck-to-paycheck.” (American Savings Statistics, MarketWatch, 8-9- 2024) v. This is from 2007: “49% of Americans could cover less than one month’s expenses if they lost their income.” (Dave Ramsey, The Total Money Makeover, p. 107) vi. This is from 2011: “70 percent of Americans are living paycheck to paycheck, just one missed payday away from disaster.” (Dave Ramsey, Dave Ramsey’s Complete Guide to Money, p. 62) vii. “National Payroll Week’s 2008 ‘Getting Paid in America’ survey found that 70 percent of Americans would have difficulty meeting current financial obligations if their next paycheck was delayed by only one week.” (Ibid, p. 76) F. We should save to help the poor. i. Those that help the poor will be blessed (Pro 22:9). ii. Those that honor God have mercy on the poor (Pro 14:31). iii. God will repay those who give to the poor (Pro 19:17; Pro 28:27). G. We should save to give an inheritance to our children and grandchildren (Pro 13:22; Pro 19:14; 2Co 12:14). 1. The need for an emergency fund A. Unexpected expenses happen and should be planned for (Ecc 9:11-12). B. If you own a house, you better be financially prepared for major “unexpected” expenses. C. The more vehicles and equipment you own, the more “unexpected” expenses you should expect. D. If you have no emergency fund, you are one unexpected expense away from financial hardship, or even financial ruin. E. “An emergency fund doesn’t just give you peace of mind; it also saves you money on insurance because you can afford a higher deductible!” (Dave Ramsey, Dave Ramsey’s Complete Guide to Money, p. 151) F. An emergency fund will be discussed in more detail later in the section on Dave Ramsey’s Baby Steps.