COVID-19 And Financial Responsibility

Proverbs 21:20 (TLB) “The wise man saves for the future, but the foolish man spends whatever he gets.”

Kristen Tate wrote an article on Sunday for The Hill called "Coronavirus reveals financial irresponsibility of Americans."  She said, "How long could you sustain your household if you were to stop earning income? If you are like most Americans, the answer is not for long. Only 40 percent of Americans can afford an unexpected $1,000 expense with their savings. In fact, nearly 80 percent of workers are living paycheck to paycheck. It is no surprise that the probability of an economic recession brought on by the coronavirus pandemic caused many to worry."

You just never know when you are going to face a financial emergency.  But you should expect it.  Eventually you are going to face financial challenges.  You might get laid off, or face a serious illness in your family, or have to repair something very expensive.  Who could have anticipated COVID-19 and the financial challenges it has caused?  That's the point.  We don't know when or what kind of financial emergencies we will face, but we know we will have to face them.  This is why the Bible says "the wise man saves for the future."

There are three essential ways you need to save up for the future to be prepared for financial challenges.

1) Set aside 3-6 months of living expenses in an emergency savings account.  If you are a single income family, make it six months.  This is not the same as income.  Living expenses include the essentials -- the amount you would need to live on for a few months if you were to lose your job.  This is for medical bills, emergency home and auto repairs, etc.  This is what you could tap into if you temporarily lost your source of income.

2) Insurance.  At the bare minimum, you need to have medical insurance and life insurance.  Medical insurance for your family, and life insurance on the family bread-winner(s).  Life insurance is very cheap, so there's no excuse for anyone to go without it.  Take your annual income, multiply it by ten, and that's how much life insurance you need.

3) Retirement.  As soon as you begin earning a paycheck, invest 15% of your income into retirement.  Old age is coming for you, and it will impact your earning potential.  Start preparing now.

If you did these three things, you would be in a very small minority of Americans.  Imagine how much more secure you would feel, and how much better you would sleep if you had these three things in place.  God works all things together for the good of those who love Him.  His purpose is to use our trials to grow us.  Don't let the COVID-19 crisis go to waste.  Let it be the catalyst that finally motivated you to change your financial habits forever.