“A penny saved is a penny earned.”

“Save up for a rainy day.”

“The art is not in making money, but in keeping it.”

We all know we should save. Scripture tells us to work and save to provide for ourselves, our families, and others (1 Thessalonians 4:12; 1 Timothy 5:8; Ephesians 4:28). The story of Joseph saving grain in Egypt and providing for many nations during a famine gives us a concrete example of the importance of saving (Genesis 41). We see how believers in the early church had saved in ways that enabled them to provide for others (Acts 2:44; 4:32-37; 2 Corinthians 8-9). We get it – saving is important, wise, and Biblical.

But it’s also hard. Economic pressures, marketing messages, easy availability of credit, and so many other factors lead us to spend rather than save. We spend what we have, and we spend what we don’t have (and pay it back, with interest, over time).

Many financial needs are noisy and pressing, demanding our attention and priority. Meanwhile, saving sits in the background – quiet, unobtrusive, nonurgent. Even if we begin to save for something we want, something more urgent always seems to get in the way. How can we break this cycle and establish a successful saving habit?

Key 1: Envision Appropriate Saving Goals

One of the most common reasons that people fail to save is that they don’t have a good “why”. This is especially true when credit is easily available. Why delay a purchase when you can have it today? But if you’ve lived with debt and also lived debt-free, you already know the reason – the peace that comes with financial stability can’t be bought with credit.

One key step toward envisioning saving goals is to establish financial priorities. To be realistic, any saving goal must be part of an overall spending plan; otherwise, the saving plan may simply not have enough funding. In the context of overall life and financial priorities, then, consider the following saving goals and envision what it might mean to accomplish them.

Emergency Fund

OK, it’s not exciting. But setting aside an emergency savings fund is one of the most basic steps toward financial freedom. Have you ever had an unexpected car repair come up or an appliance break down and had to pay for it on credit? How long did it take to pay that off, and what was the impact on your finances in the process?

Now envision the next time an emergency like that comes up, having the money set aside to pay for it without incurring additional debt. Sure, no one wants to spend money that way – but crises will happen. Imagine the freedom of being able to handle such an unexpected event with money you’ve designated for that purpose, rather than having to use a credit card!

A good goal for an emergency savings fund is about 2% of annual gross income. This is a fund large enough to handle the typical unexpected repair or other expense, but small enough to be doable relatively quickly.

3-month Net

If you’ve ever lost a job or faced a prolonged health crisis or similar event, you likely know the stress not only of the event itself but also of the impact on your finances. You plan the first family vacation in a couple of years, but then a major house repair takes its place. Your company downsizes and all of a sudden your family’s main income disappears.

What would it be like to be able to handle a larger situation like this with money you’ve set aside? Sure, the crisis itself would create stress, but what if you at least knew how you would handle it financially? What if you had enough cushion to spend a month or two looking for the right job – without destroying your family’s financial health?

The 3-month net is a safety net. It’s anywhere from 3-6 months of net income, set aside to handle a more prolonged or more impactful event. Saving this much takes time and discipline – but think of the reward when that major crisis hits.

Replacement Fund

Appliances break down. Cars don’t last forever. And most of us rely on credit of one form or another when we have to replace an appliance or a vehicle.

But what if you didn’t have to open up a new credit card at the appliance store and add one more bill to your cycle of monthly payments? What if you didn’t have to take on a car payment the next time you had to replace a vehicle? What could you do with that four, five, or six hundred dollars a month?

A replacement fund is savings set aside to replace larger-ticket items, such as an appliance, a piece of furniture, or a vehicle. At the low end, it should be enough to replace the most expensive appliance and at the high end, it should cover the cost of a vehicle replacement. It doesn’t have to replace with an upgrade or even like-for-like, but if that’s the goal, then be sure to take that into account when determining how much to set aside.

Long-term savings

Saving to fix or replace things that break down or to bridge the income gap from a job loss or major medical expense is necessary, but it isn’t exciting. After all, these types of saving just get us back to where we were before the crisis. They don’t move us ahead; they just keep us from falling behind. They’re like a form of insurance.

But long-term saving is different. Most of us envision our children going to college and getting married. And most of us envision a lifestyle where we’re eventually not working full-time to earn an income. These can be exciting possibilities – if we’re financially prepared for them. That’s what long-term saving does.

Determining the need for long-term savings requires a lot of thought and often some expert assistance. At a minimum, retirement saving should include maximizing any available employer matching contributions to a 401(k) or similar program. Beyond that, long-term saving should be guided by goals and projected expenses in key areas like the ones mentioned above.

Generosity Fund

Many people have found great meaning in maintaining a generosity fund – an amount of money beyond their normal giving that they reserve for responding in the moment to the Holy Spirit’s leading.

Have you ever encountered a need that you wished you could meet, but weren’t prepared financially for? Maybe it was a homeless person on the street corner that you wished you could help, or maybe it was a donation request from an organization you’d love to support. How would it feel to be able to prayerfully respond to these situations with money you’ve set aside for the purpose?

Setting aside and using a generosity fund is a highly personal decision and there aren’t any hard-and-fast guidelines for how much to set aside (or even whether to set up such a fund). But a good rule of thumb might be to set aside enough to be able to donate meaningfully (however you would define that) to an organization or to meet a specific need.

Back to top

Key 2: Enforce Effective Saving Disciplines

Having appropriate goals determined through prayer is just the first step toward saving successfully. The goals don’t matter if we don’t have the disciplines in place to achieve them.

Suppose someone sets a goal of running a marathon. But then, instead of devoting themselves to training for the marathon, they spend all their time on hobbies and entertainment. When the marathon rolls around, it’s highly unlikely that they’ll be able to finish it.

Saving is similar. We can set goals, but along the way there will come a number of other uses for the money we had intended to save. Some of those may be valid, and may require us to alter the timing of reaching our goals. But many will simply be distractions – things that may look attractive in the short term, but that lure us away from our saving goals. The right disciplines can keep us on track and help us avoid these distractions.

Discipline 1: Tracking

Tracking our spending is the starting point. Most of us, if we’re not tracking our spending carefully, don’t really know how much we’re spending in various areas. And if we’re not tracking, there’s a good chance that we’re under-saving – that is, not saving sufficiently to provide for our future needs. Saving likely requires some adjustments in our spending, and tracking our spending shows us where to make those adjustments.

Tracking spending is the starting point (as opposed to creating a spending plan) because our spending records provide a basis in reality for planning our spending. In fact, if you don’t have a spending plan, it’s a good idea to accumulate at least a month’s worth of spending records before creating a plan; this will keep the plan realistic.

Tracking doesn’t have to be complicated and it doesn’t have to take much time. Most people can track daily expenses in a couple minutes a day. Determine the categories that are important to track and start there; over time, add more categories as needed. For more information, see our related article, How to Track and Categorize Spending.

Discipline 2: Planning

With specific spending patterns in hand, the next step is to plan spending going forward. Planning is how we add an element of control to our spending. Creating a Spending Plan can feel restrictive, but it actually adds freedom. Think of the spending plan like a steering wheel on a car. A car without a steering wheel gives freedom in the sense of going in any direction – but it can’t control the direction in which it’s headed. That’s not real freedom – it’s chaos. Putting in a steering wheel to control the direction actually creates the real freedom – freedom to steer in whatever direction the driver decides to go.

A monthly spending plan should both reflect and guide monthly spending. The plan should be created with categories that match the spending record, in order to maximize its effectiveness as a guide for spending and to enable evaluation of actual spending. Reviewing actual spending against the plan regularly helps to determine whether spending is on track or veering off. When spending exceeds the plan, saving is usually impacted; so regularly comparing actual to planned spending is a key to success in saving.

A second important plan is a plan for increase. Most of us receive income increases on a somewhat regular basis – whether in the form of a raise in regular income or in the form of a bonus or maybe a tax refund. Both types of increase provide excellent opportunities for saving; the key is not to let our lifestyle creep up to match our income every time we get a raise or a bonus.

Discipline 3: Automation

Automating our saving provides opportunities to execute a saving plan consistently despite the ups and downs that we all inevitably face financially. Most automation occurs with deductions from paychecks – 401(k) and other retirement plans, Health Savings Accounts, and other forms of saving. One additional advantage of this type of automation is that many of these provide an immediate return on investment (though we have to wait to actually realize the return). Employer matches and tax deductions provide an effective return on top of any investment return earned through the markets.

Payroll deductions typically apply to long-term saving (such as retirement or college funds). But short-term saving, such as emergency, 3-month net, and replacement savings, can be automated through recurring online transfers into savings accounts.

Automation makes saving a priority rather than an afterthought and can be a key component to successful saving.

Discipline 4: Managing Trade-offs

In a sense, a spending plan is a zero-sum game. That is to say, a dollar added to saving has to come from somewhere else. At the end of the day, the spending plan balances to zero – spending (including giving, saving, and debt retirement) equals earning.

This has at least two implications for saving. First, in planning our spending, prioritizing saving necessarily comes at the expense of other areas of spending. This is why it’s so important to understand our life priorities and financial goals (short-term and long-term) as we plan our spending. We may find that in order to make progress toward a 3-month net, we need to reduce some entertainment expenses. Or perhaps in order to increase our automated retirement contributions, we may need to dial back on some current household expenses. Managing these trade-offs effectively puts us in a position to get on track and stay on track with saving.

Second, as we compare our actual spending to our plans, we’ll usually find that some expenses are higher than planned. These expenses may be squeezing out saving. If that’s the case, we’ll need to either adjust spending in those areas or revise our spending plan to reduce in other areas in order to cover these higher-than-anticipated expenditures. This is an ongoing process that keeps us from drifting away from saving.

Back to top

Key 3: Establish Biblical Boundaries

Most of our conversation so far has been around finding ways to prioritize saving wisely. But successful saving isn’t the same thing as “saving everything we can for as long as we can.” Without Biblical boundaries, saving can degenerate into hoarding.

While Scripture doesn’t tell us exactly how much to save, the Bible does suggest some helpful definitions of saving and hoarding. Saving is putting money aside for appropriate goals, such as the ones we’ve been discussing. Hoarding is stockpiling beyond our needs or setting saving goals that give us an excuse to “build bigger barns” (see the Parable of the Rich Fool, Luke 12:13-21).

How can we tell if we’re crossing the line from saving into hoarding? There are many indicators, but here are a few key ones:

  • Saving is impinging on generosity. When saving for our own needs keeps us from prioritizing giving, it’s probably veering into hoarding. This is an indication that we’re putting our own needs ahead of serving God. In the words of Matthew 6, we’re storing treasure on earth rather than in heaven.
  • Saving toward undefined targets. The targets and goals we’ve discussed for short-term and long-term saving should help us determine how much to put aside. Saving beyond these targets (“just in case”), with no specific purpose in mind for that saving, becomes hoarding. This kind of saving is driven by fear rather than faith.
  • Worrying over money even though we’re saving sufficiently to meet our goals. This kind of worry is another indication of fear-driven rather than faith-driven saving, and may lead us to over-save. This is one way in which we may serve money over serving God. Over-saving may deprive us of opportunities in other areas of life by leading us to work excessively rather than spend time with family, in community, etc.

Back to top

Successful Saving Summarized

Saving, of course, is just one part of our financial stewardship – often a difficult part, to be sure. It needs to be planned and executed within the overall framework of faithful stewardship and a viable spending plan. Here are a few characteristics of successful saving:

  1. It’s prayerful. A basic tenet of stewardship is that all we have belongs to God. Therefore, our saving (like other areas of stewardship) should be bathed in prayer and seeking God’s leading.
  2. It’s prioritized. Successful saving isn’t an afterthought, something we do if we have anything left over after all our monthly spending. We prioritize saving by making it an intentional part of our spending plan and by automating as much as possible.
  3. It’s purposeful. Successful saving has a purpose. It’s not just an aimless accumulation of funds that gives us a sense of security. We ensure that our saving has a purpose by determining specific saving goals and putting in place a plan to reach them.

Saving wisely, intentionally, and gratefully is a faithful use of the resources that God provides. May He guide us into Biblical saving for His use in our lives!

Back to top