People often ask, “How much money should I have in savings?” Given the statistics showing how few Americans save, the first question perhaps should be, “Why save at all?” The answer is that savings promotes continuity.
Jesus likened those who acted on His words to building a house on a rock, as contrasted with building on sand. When the storm came, the house built on the rock stood while the one built on the sand fell. (Matt. 7:24-27). What’s interesting is both the wise man and the foolish man were subject to the same storm. In other words, surviving the storm was not a result of having been exempt from it but having prepared for it.
Everyone is subject to storms. Adversity is a given. What matters is how you prepare for it. Having money in savings allows one to weather the storm and keep going without getting slowed down or pulled off the path of one’s destiny. It provides continuity, a hedge against interruption. Continuity is “[a]n uninterrupted succession or flow.” (The American Heritage Dictionary, 4th Ed.).
Some may say this is not faith but trusting in savings and that real faith is trusting Jesus to get you out of the adversity once you find yourself in it. But that is not what Jesus said. Jesus said to prepare because storms will come. Faith is trusting in what Jesus said and acting in obedience to His words.
So how much savings is enough? The general rule of thumb is six months living expenses, although I believe that is really the minimum. That means the more debt you have (mortgage, cars, credit cards, student loans, etc.) the more savings you need. The irony is those who are already in debt need to save more to maintain continuity in their lives but because of their debt payment obligations are less able to do so. Those with little debt and lots of discretionary income needn’t save as much but are better able to do so.
With these principles in mind you should be able to put pen to paper and figure out how much savings you need to ensure when the storm comes you can preserve continuity in your life. GS