On Sunday, we had a wonderful lesson about the importance of financial independence and preparedness for hard times. While some might think such lessons sound too much like doomsday paranoia, I believe in the message. Looking at the economy as a whole, it is possible that it will be harder to secure credit in the near future, making it harder for many people to buy homes or automobiles. When more has to be purchased with cash, it means more savings and preparedness comes into play. Dave Ramsey does a radio show weeknights helping people figure out how to deal with certain debts they have incurred, how to manage their cash flow, and (once they are debt free) what to do to save and invest for the future. He regularly talks about having a six-month emergency fund in the event of the unexpected. The lesson on Sunday also discussed such a plan, explaining various ways to manage such funds. Some cash should be immediately available (emergencies often mean banks are not available), as well as a 72-hour kits of food, water, and clothing (the link is just one example kit, but it is easy to prepare one without buying it ready-made). A good guideline is to have cases of bottled water, food that does not require microwave preparation (and if any heat is required, it's a good idea to have a pot and pan, as well as some means of making a fire), and clothes that are regularly updated to fit children as they grow. It never hurts to have some fuel around, as long as you have a safe means of storing it away from pets and children.
One of the best things to do for general emergency preparedness - losing a job, new illnesses, unexpected pregnancies, car accidents or maintenance problems, home repairs, extreme weather - is to get out of debt and stay out as soon as possible. Avoiding new debt can be hard with so many "get it now, pay later" sales out there, but it's better to plan for purchases by saving up instead. Debt avoidance can reduce the effect of any emergency on an individual or a family.
Three years ago, four major hurricanes hit Florida after none had come in several years. The next year, one of the most terrible hurricanes in recorded history hit Mississippi and Louisiana. I saw first hand at the sites of all those hurricanes (thanks to relief efforts through my church) how quickly a world can change. Tornadoes have destroyed homes across the nation for the past several years - even in places that almost never get them. Wildfires and mudslides have plagued the West in various places over the past few years.
Planning for such calamity might sound extreme, until it happens. Right now, many families wish they had planned their spending better as adjustable rate mortgages go up, as the economy slow-down means lower wages or lost jobs, and as inflation has caused everything to cost more today than yesterday. One of the best resources around for preparedness is Provident Living. It offers resources for budgeting, food storage, and various other areas.
One thing I personally agree with that Dave Ramsey teaches with his financial planning is including tithing (giving a tenth of one's increase to the church) and offerings (excess giving beyond ten percent). By planning that outlay, it helps begin the process of budgeting, and it blesses the giver. Even if someone does not follow a particular religion, giving to charitable organizations can be an uplifting way to share wealth. Tithing and charitable givings are also tax deductible, but it would be good to do regardless, in my opinion. I can certainly see how giving has blessed my own life, and the results of others' givings have blessed many.
In the end, the main reason to get out of debt and manage finances is to find peace and security. When a long-term savings plan is in place, it becomes easier to face good times and bad. By living on less, it becomes easier to save for retirement, plan for children's schooling, and manage day to day life. Too many in today's world live in the now, or really live on future earnings they cannot guarantee they will produce. We could all stand to learn to manage our finances better.