Day 6: Savings, Investments, And Retirement

This area of finances is probably one of my favorite areas to talk about. There are a million different ways this conversation can go, so just like with your budget, pray. Pray as you consider these areas of your finances.

I listened to Dave Ramsey for awhile and went through some of his material, which I found really helpful. It helped me take money seriously, and I think Dave serves the world a great purpose to wake people up and get them going, especially on some basic foundational principles of money. Things like getting out of debt and not spending what you don’t have. 

He is very black and white, which I actually like, and I believe the first few steps for most people’s financial situation really is black and white. Get an emergency fund going, pay off all your debt, and get to work on 3-6 months of savings. I agree with those and would suggest that to anyone, but after those steps, I think the options are more wide open than what Dave would suggest. That’s why I wanted to talk about this area about finances. 

Savings And The Emergency Fund

Simply put, there is great wisdom for the follower of Jesus to make a plan in the event of an emergency. It’s not planning in the event that you need endless money and need to cover all emergencies yourself because God can’t (God will provide for you and take care of you along the way), but the flip side of thinking you don’t need to do any type of planning would not be wise. 

By not taking steps to build a savings for your household, you’re betting on debt to cover the problems that will come up. We are still sinful and are still in a sinful world, and you better believe that’s going to affect us financially. That being said, what we have done and what I would suggest along with experts much smarter than myself is shoot for 3-6 months of expenses. 

Notice I said expenses because these are “needs” you’re saving up for in the event of an emergency. Emergencies such as a job loss, medical situation, etc. It’s not an emergency if you keep going over on your budget; that’s just a planning adjustment to be made. 

I know 3-6 months may sound ridiculous to you, but start small. Start with getting $1,000 in your savings. Then increase it to $2,000, then $3,000, then go from there. One day at a time. 

There’s a HUGE reason to cap your savings in this context and why I would suggest 3-6 months but no more in terms of covering your emergencies. If you think about it, most of us don’t know our goals, we don’t know what we are shooting for… so what happens is when we think of our savings, all we think to ourselves is “I don’t have enough, I need to keep saving.” But what IS enough? How do you KNOW what enough is? With a savings goal like this, you can literally hit your cap (whatever amount you have prayerfully determined), then be done with it. Now I’m not talking about investments and retirement (I’ll speak on that in just a second), but your foundational savings. Cap it, be done with it, and move forward.

You’re doing that because you’re trusting in God being your provider along the way. That is tremendously freeing because you can confidently work on your other goals and not always be thinking “I gotta be saving more.”

Investments and Goals

The 3-6 months of savings, to me, is black and white, and I would counsel anyone and everyone to make this an early part of their financial plan and get it done. When it comes to investments and other goals, this is much more open to how you believe God is leading you. Pray.

Maybe a goal for you is saving up for college. Perhaps saving up for a down payment on a house. You might be content with just renting along the way (which I know you aren’t earning equity, but just remember rent provides you with a monthly fixed bill and nothing more in terms of house repairs). Renting can be a wise decision as you are completing other financial goals. 

There are countless options of investing advice out there. I think investing can be very wise financially, but with anything, we need to pray. Many people feel led in different directions, so I’m going to talk about a few options, but obviously won’t be able to cover them all here.

JL Collins, wrote a book called The Simple Path to Wealth, which is an incredible book about investments and the stock market, and is an easy read. It might be the only book you need to get started down this path. Perhaps the last book you need. He also wrote on his website a series called the Stock Series which has a ton of posts about this topic.

In a nutshell, investments in terms of stocks and bonds don’t have to be complicated. Especially for the Christian. The more you can just auto “set and forget,” the better. The reason most people get in trouble is that they get scared and make emotional decisions that go against their long term goals. For the follower of Jesus, we trust God will take care of us regardless of what happens, so we can make confident and wise and calm decisions along the way. 

I’m not advocating for pouring ALL of your money in the market, but to ignore the market and compounding interest all together, that would not be using wisdom. You also need to make sure you understand what money is, stick to a budget, pay off your debt, and build your savings first as you are looking at investments.

Another popular option is real estate. Again, pray through all of this and talk to people in your community who invest in real estate before making any big decisions about it. I know a lot of people who do a mix of the stock market and real estate when it comes to their investments. I also know others who like to invest in small businesses. There’s many options out there, so take it slow and steady.

Everyone has different callings from the Lord based on where He has placed you,  on the desires He has put your in heart, and on the skills and abilities He has given you. We all have different goals in mind. Spend some significant time with God through the Bible and prayer and seek Him out on some 10, 20, 30 year goals. You don’t have to have your life figured out, but chances are you can figure out the general financial direction you’re headed.

Retirement

This brings to mind so many different pictures for us. Some think laying on the beach and never lifting a finger again. Others think running their own business and being independent from relying on others. Others think they will never retire. Others think even if they have the option, they’ll work until they are dead. You can see how and why these need to be prayerful decisions. 

What does retirement mean for the Christian? There’s not a direct answer to this biblically, but something we do know is that this side of heaven, until we die or until Jesus returns, we as followers of Jesus are tasked with the great commission. To go make disciples who make disciples. That never ends, regardless of our age. 

At the same time, that doesn’t mean you’ll be doing the same thing today in 20, 30, 40, or more years. Your life will look different when you get older. Chances are, it already looks different now than it did 10 years ago. We still have sinful bodies that get older and break down more often, so even physically things will not be the same. 

I personally believe that older men and women have a great responsibility to pour into the younger generations because, by that time, they would have gone through so much life and God would have given them so much wisdom, they need to share it. It would be such a waste to get older and turn inward and waste your last remaining decades here on this earth. 

All that being said, just like any other stage of life, it’s important for us to prepare for it financially.

I can’t speak to any specific age here because sometimes people retire when they are in their 30s, or 50s, or 90s. It’s going to be a little grey on how some people determine what “retire” means, but most typically think of financial independence. Basically when you have the ability to provide for yourself, without depending on someone else or another company to do so. When that happens, people “retire.” 

Being retired and being financially independent gives you greater options to say “Yes” when God calls. Imagine the possibilities and what you could do for the rest of your life! 

Most resources out there will say to save 15% towards retirement, typically in vehicles like your 401k, an IRA, or a Roth IRA. While that is a great point to get to if you’re not there already, you’ll want to pray through this percentage. This all depends on your goals. At 15% in most vehicles, it would still have you working for quite some time. And that is perfectly fine if you’re good with that. If you feel God spurring you on to something else or being financially independent earlier than that time frame, then obviously 15% will not be enough. 

How much should you save towards retirement? Pray about it and see where you are with your other financial goals. 

Should you match your employers retirement contribution? Yes. Always yes. Never throw away free money. You surely can make adjustments to your budget to accommodate for this.

ChooseFi is a great resource for considering financial independence and what that can look like for so many different people. I’d highly suggest checking out their site. They do a great job unpacking details on 401ks, types of IRA’s, etc. 

The point at the end of the day isn’t so much to make sure you have millions and millions of dollars at retirement. It’s to pray through what God has for your life, what the Bible has to say, and to be financially wise at all stages of life, including the retirement stage. 

Savings, Investments, and Retirement Resources

Just like budgeting tools, there are so many resources out there.

Vanguard

M1 Finance

Betterment

Fidelity

Charles Schwab

JL Collins Stock Series

ChooseFi

Personal Capital

What We Do

At the time of this writing and over the past decade as we’ve prayed about it, we believe God told us five months is adequate for us to save for in terms of our foundational savings. We contribute to our employer retirement accounts and as we’ve looked into more investments across the board, we really like the strategy that JL Collins talks about in terms of the Total Stock Market for stocks and the Total Bond Market for bonds, and then adjusting our ratios as we age. So as we get older, our stock percentage will continue to decrease and our bond percentage will continue to increase to more fully secure the money. 

We also are praying through what does real estate look like to us. I personally like the idea of having funds spread out in different spots (not too many because I feel like that would be a headache), but there’s something about the stock market and real estate at the same time that seems really appealing to me. I think the Lord is leading us in that direction, but we are taking things one step at a time.

I’m definitely not one to “be done” when I get older and I always have to have many things going on at once, so I expect to be working for a long, long time. Hopefully, as we get older, working wouldn’t be out of a necessity, but more out of a passion.