Monday, October 22, 2007

Coming Soon: Finance 4 - Planning for the Future

So this week's sermon is about planning for the future, specifically saving and investing. Here's a rough sketch of what I'm thinking of so far.
There are three basic kinds of savings: emergency fund (for genuine emergencies like losing a job), purchase funds (like saving up for a car or an appliance), and long term savings (like retirement or college funds).
We need emergency funds to stay out of debt when crises come. Crises will come. The only question is - "Will we be ready?"
We need to utilize purchase funds as a better option than debt. If we will just wait until we can pay cash, we'll save a lot of money and heart-ache.
We need to save for the future, and capitalize on the benefits of compound interest. This is the old graph of how saving a thousand dollars a year will make us millionaires by the time we retire. It's a little trite, but it's true. Here's where the rubber meets the road though: when we consider current value verses opportunity lost. Young people especially often feel like they don't have the money to save for retirement, but we do have the money to spend on other things. Was that $1000 computer or vacation really worth the $750,000 we could have earned with it by putting it into a good mutual fund in a retirement account?

How do I keep this from being trite?
How do I keep this from focusing on building wealth, and more of the me-me-me culture, with simply a longer-term more prudent perspective (Save a little now, and you can be as selfish as you want when you retire.)?
What is the balance or difference between saving and hording?
How much should I talk about my personal finances?
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