Though giving of your resources is honoring to the Lord, the Bible also explains that the wise man saves for his future (Proverbs 21:20). Watch the following video on the biblical basis for saving.
Next, read and reflect on the content in Compass’s brief introduction to saving (Source).
“Saving”
Unfortunately, most people in America are not consistent savers. Look at the graph below. It’s shocking! Americans saved an average of 10.8 percent of their income in 1984. By 2006, their rate of saving had fallen to a negative 1 percent, the lowest savings rate in the past seventy-three years!
The Bible encourages us to save: “The wise man saves for the future, but the foolish man spends whatever he gets” (Proverbs 21:20, tlb).God commends the ant for saving. “Four things on earth are small, yet they are extremely wise: ants are creatures of little strength, yet they store up their food in the summer” (Proverbs 30:24-25, niv). We need to think like ants! Even though they are small, they save. You may not be in a position to save a lot right now, but begin the habit even if it is only a few dollars a week.
Joseph saved during “seven years of great abundance” (Genesis 41:29) in order to survive during “seven years of famine” (Genesis 41:30). That’s what savings is all about: not spending today so that you will have something to spend in the future. Most people are poor savers because they don’t see the value in practicing self-denial. Our culture screams that we deserve to get what we want, when we want it—and usually that’s right now!
The most effective way to save is to make it automatic. When you receive income, the first thing you should do with the money should be a gift to the Lord, and the second should go to savings. An automatic payroll deduction is even a better way to save. Some people save their tax refunds or bonuses. Remember this: if you immediately save, you’ll save more.
The Bible doesn’t teach an amount to be saved. We recommend saving ten percent of your income. This may not be possible initially. But begin the habit of saving—even if it’s only a dollar a month.
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Compass also offers some basic advice on saving for retirement (Source).
“Saving for Retirement”
Life expectancy is growing and fewer companies provide pensions. And Social Security? Well, don’t bet the farm on it, because the entire system is projected to run out of money. The bottom line: don’t rely solely on an employer or the government; you need to invest for your retirement.
When investing for retirement, here’s a simple rule of thumb: First, take advantage of all employer matches. Second, invest in a Roth IRA. If your employer offers to match your contribution, do it! It’s free money. For example, if your employer will match up to three percent of your salary in a 401k, put three percent in. It’s that simple.
If you don’t have a match, or once you have contributed the maximum that will be matched, fund a Roth IRA. I am a huge fan of the Roth. Although your Roth contributions are not tax deductible, they grow tax free, and after age fifty-nine-and-a-half, all withdrawals are tax free! The downside of a traditional IRA is that all withdrawals are fully taxable. I believe the government’s deficit will lead to much higher income taxes in the future, so using a Roth will be a huge advantage.
You and your spouse can each invest $5,000 to $6,000 every year in a Roth IRA. Since there are limitations based on age and income level, check with your tax preparer to determine what you can contribute.
