Build up Savings and Cash Reserve
“We ought to have a little money laid aside in case of a rainy day.” Gordon B Hinckley, 2005
One common misunderstanding is that preparedness is only for widespread, apocalyptic-type events. While we know that these kinds of “great upheavals” will become more common in the last days, we also know that disruptive events occur even more commonly on a single-household basis. Employment ends or changes for the worse, auto accidents occur, medical emergencies befall, major appliances fail, water pipes break, and things always seems to fall just outside the purview of insurance and warranty. At these times, having adequate savings can mean the difference between peace in the midst of trial and facing immediate financial catastrophe.
Shortly after our marriage, my husband and I felt prompted to save up for our Six Month Savings Fund.
- We made a list of only our monthly essential needs and pared them down as much as we could For us, at the time, this was housing, electricity, telephone, water/sewer, insurance, diapers, 2 tanks of gas and a little fresh produce to supplement our food storage. Multiply by six.
- Pray! My husband felt strongly that we should set a certain date to achieve our goal…a date by which it was mathematically impossible for us to reach our goal. Our reaching our goal by that date was simply miraculous. Heavenly Father wants us to live providently and will bless our efforts! Remember Nephi’s courage…
- Keep your goal in sight. Pray daily. Purchase carefully. Be willing to sacrifice short-term wants for long-term blessings.
- Once you achieve your goal (congratulations!), keep the money accessible. It may be tempting to invest it somewhere your yield might be greater, but don’t risk your rainy day fund. Keep it out of stocks, accounts that are uninsured or have long periods when you cannot access your money (such as retirement accounts and certificates of deposit).
- Enjoy your new-found peace of mind. Since then, we have known that whatever calamity may strike, we have six months of essential needs covered so we can address that problem rather than trying to figure out how to keep bills paid and a roof over our heads.
Another important aspect of having money set aside is having Cash on Hand. This is a bit controversial in some circles, but here are some reasons you should consider it:
- If your purse, wallet or identity were stolen, you would likely need to freeze your accounts and credit cards for at least a couple of days while they issue you new cards, perhaps much longer if your case is complicated.
- Severe weather, software problems and security issues can disrupt the daily operations of your financial institutions. If your bank’s headquarters were just hit by a hurricane, computer glitch or hacker, you may face difficulties or delays in accessing your money.
- Local power outages can also wreak serious havoc. Typically, ATMs will not work, credit and debit cards will be useless and checks may be particularly undesirable to merchants if they cannot verify funds or know when they will be able to deposit them.
These are situations we are likely to face that make having available cash highly desirable. You will need to determine how much. Recommendations vary. You should aim to have at least enough for three days’ worth of essential purchases. You may decide you would feel safer with a month’s worth of essentials, a month’s complete expenses including bills, or even more. Once you have it, keep it safe. You may wish to install a good, fireproof safe, or, if your finances do not allow that, search online for suggestions on hiding valuables in your home. Here is just one page of ideas:
“Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.” D&C 64:33