In two recent articles, we looked at what the Bible teaches about generosity, and what the Bible teaches about our biblical financial identity, purpose, earning, and planning. This week, we’re taking a closer look at what the Bible says about saving and investing.
Biblical saving – avoiding two forms of foolishness
It’s noteworthy that the Bible uses the words “foolish” and “fool” to describe people on both ends of the savings spectrum.
It’s foolish to not save anything.
“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” – Proverbs 21:20
And it’s foolish to save too much.
“The ground of a certain rich man yielded an abundant harvest. He thought to himself, ‘What shall I do? I have no place to store my crops.’
“Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store my surplus grain. And I’ll say to myself, “You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.”’
“But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’
“This is how it will be with whoever stores up things for themselves but is not rich toward God.” – Luke 12:16-21
So, if it’s foolish to not save anything and only a fool saves too much, how much should we save? While the Bible doesn’t get specific, I recommend three types of savings.
- Three to six months’ worth of essential living expenses kept in an emergency fund savings account. If you’re not there, see if you can steer 10-15% of gross monthly income toward savings.
- A big-ticket item replacement savings account. Once your emergency fund is fully stocked, you can redirect most of what you had been saving each month toward investing, but keep putting 2-5% into savings (preferably in a separate savings account) in order to be able to pay cash for the eventual replacement your car or other costly items.
- A periodic bills and expenses savings account. This one doesn’t require “extra” money. Instead, for each periodic bill or expense (those that don’t need to be paid every month, but do need to be paid sometime throughout the year), put one-twelfth of the annual amount on your monthly budget. Then take the total monthly amount of all periodic bills or expenses and transfer that amount to yet another separate savings account. That way, when the bill comes due, the money will be available.
For more on this topic, read other articles I’ve written about saving.
Biblical investing – slow and steady wins the race
Investing is different than saving. Saving is for relatively short-term needs. Investing is for longer-term goals, such as retirement or helping kids pay for college.
A key biblical principle is to invest a little bit at a time for a long period of time.
“Steady plodding brings prosperity; hasty speculation brings poverty.” – Proverbs 21:5
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” – Proverbs 13:11
One of the truly timeless principles of wise investing—diversification—came well before the invention of mutual funds, the Dow Jones Industrial Average, or even the birth of Jesus. It is found in the book of Ecclesiastes.
“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” – Ecclesiastes 11:2
As we invest, we should keep in mind that our purpose is to provide for our family.
“Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever.” – 1 Timothy 5:8
Investing wisely over a long period of time can create tremendous wealth, which is why it’s so important to remember why we’re investing. Any wealth we build is to be used for God-glorifying purposes. We should not trust in that wealth.
“Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” – 1 Timothy 6:9-10
“Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.” – 1 Timothy 6:17-19
Investing is arguably the most complicated and intimidating aspect of personal finance, which is why the biblical encouragement to seek wise counsel is especially applicable.
“Where there is no guidance the people fall, But in abundance of counselors there is victory.” – Proverbs 11:14
And men, may I (with a smile on my face) call special attention to the following verse?
“The way of a fool is right in his own eyes, But a wise man is he who listens to counsel.” – Proverbs 12:15
Research shows that men are generally more confident about their investment abilities than women, are more likely to invest based on a “hot tip” they receive, and make investment trades more often than women. Women are more likely to seek professional investing advice, and they generally have a better track record as investors than men.
Wise counsel could take various forms, including working with a financial advisor or subscribing to a trustworthy investment newsletter.
For more guidance on investing, read The Essentials of Investing.
As you review the various verses pertaining to saving and investing, to what degree have they guided your saving and investing behavior?