You may have mastered your out-of-control spending habits and become the world’s best budgeter. You’re not only allocating money for things that you spend every day, but you also set money aside for annual expenses. Maybe you even have some long-term savings for things like houses or cars, or some retirement savings in the form of investments. That’s all great, and it will serve you well. But if you’re not also saving money for emergencies, you’re inviting financial disaster into your life.
Emergency savings — or “emergency funds” as they’re often called in financial planning circles — can be difficult to start. After all, there are so many things that we would love to spend our extra money on, and it’s absolutely no fun to save that money “just in case.” And it’s not in the nature of most of us to expect bad things out of life. We live pretty comfortable, predictable lives here in the United States, with the expectation that the future will be generally good, pleasant and enjoyable.
It’s easy to develop an attitude of invincibility. After all, how many times have you seen people suffering from a health emergency or natural disaster on TV, and secretly said to yourself “I’m glad that won’t ever happen to me”? The problem is that those people never thought it would happen to them either. But bad stuff happens in life, and sooner or later it’s going to happen to each one of us.
So how do we handle financial emergencies when they come up? With our emergency funds, which we have diligently saved in the good times so that we could be prepared for bad times. It’s an age-old principle that we can trace all the way back to the Old Testament book of Genesis.
In Genesis 41, Joseph has become an adviser to the Pharaoh of Egypt, and interprets some of Pharaoh’s dreams. God reveals to him through the dreams that Egypt is about to experience seven years of abundance, followed by seven years of famine. So with the knowledge that the good times won’t last forever, Joseph orders that the nation store up some of its agricultural wealth for use during drier times:
“Let Pharaoh appoint commissioners over the land to take a fifth of the harvest of Egypt during the seven years of abundance. They should collect all the food of these good years that are coming and store up the grain under the authority of Pharaoh, to be kept in the cities for food. This food should be held in reserve for the country, to be used during the seven years of famine that will come upon Egypt, so that the country may not be ruined by the famine.”
Joseph created history’s first recorded emergency fund. Sure, the Egyptians could have had a grand time with the extra food during their times of abundance… but it would have left them desperate when the famine struck. Joseph’s wisdom likely saved thousands of people from dying of starvation. And this foresight even allowed him to take care of his own family, who had betrayed and sold him years earlier (Gen. 42).
Joseph’s story is larger than most of our own financial lives, and he did have prophetic insight from God that allowed him to make such a wise decision. But we can apply that same wisdom to our own circumstances. Hopefully none of us will live through seven years of famine, but bad things happen still.
We live in a world full of broken people and things that are falling apart. Sooner or later, those people or things are going to cost us a lot of money that we hadn’t been planning to spend. If we’re not prepared with emergency savings, we end up dangerously exposed to bad circumstances, forced to take on debt or neglect life’s necessities in order to pay an unforeseen bill.
In upcoming articles, we’ll deal with a lot of practical ideas about emergency funds and how to build them. For now, though, take a cue from Joseph. In times of abundance, prepare for times of lack.
After all, it’s not a question of “if.” It’s only a question of “when.”
Photo via Flickr, by user Bill Sutton. Used under Creative Commons License.