You should have three to six months living expenses in your emergency fund, but what if you can't get to that money?
Hi, I'm Rob West. Does your emergency fund need an emergency fund? That would be money you actually have on hand and not in a bank. And if so, how much? We'll talk about why and how to stash some cash today, and then it's onto your calls at 800-525-7000.
That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Now it's probably a good guess that many of you use a debit card or maybe a credit card to get reward points. And as a result, you keep very little, if any, cash on hand. Debit cards in particular are now so convenient that many folks no longer get cash out of the bank, especially since they can always get cash from an ATM if it's needed for any reason. But that's all the more reason to keep a relatively small cash reserve on hand.
Why is that, you're wondering? Well, if ATMs are convenient, and they are, why do we need to keep cash on hand? Well, keep in mind that we're not talking about a lot of cash, just a few days' worth. This would be in case you can't get to a bank or an ATM. Or less likely, but not impossible, there's some short-term interruption in banking services. That could be network-wide if your bank is hacked.
Again, not likely, but possible. Or more likely, an individual interruption, like if your account is hacked or your identity is stolen. Those things could temporarily separate you from your money. So how much cash should you keep on hand? Well, several consumer experts have written about this, and I tend to agree with the consensus that about three days' worth is enough. Now, that's a guideline, not a rule.
Your needs may vary. For example, if you have a medical condition that frequently requires medication or supplies, you might want to take that into account. Determining how much cash you need to keep on hand is relatively simple. Just go through your bank and credit card statements to find a month where you didn't have any unusual expenses. From your total spending that month, subtract your regular bills like the mortgage and utilities. You're left with just the expenses where you used a credit or debit card and any cash you took out at the bank or ATM. Then divide that number by 10, and you'll get the amount of cash you typically need for three days.
It will probably come out to several hundred dollars, maybe more if you have extenuating circumstances. That's how much cash to keep on hand. Now, do you keep that cash in a coffee can buried out back?
I think not. It's best to keep it in a fireproof home safe, probably one bolted to the wall. If you're already using a cash envelope system, you probably think you don't have to bother with any of this because you always have cash on hand.
Or do you? What if the banking hiccup hits on the last day of the month? Your envelopes would be largely empty, so you need to have this emergency cash in a separate envelope altogether. Okay, we've been discussing the need to keep an emergency emergency fund of cash on hand. But what about your regular emergency fund, the one with three to six months living expenses?
You don't want to hide that under the mattress. Wouldn't it be great to know that your financial institution is supporting Christian values and making a positive change in the world, in addition to providing great service and a safe place to keep your emergency fund? Wouldn't you want that institution to put people over profit?
Not that profit is wrong, but it can't be the only priority. Stewardship involves one hundred percent of what God gives us, not just the ten percent we put in the offering plate. As Christians, it's never been easier to find and support faith-based institutions whose mission is to help Christ followers live and give more abundantly. There are several great faith-aligned banks and credit unions available today. One example is Christian Community Credit Union, an underwriter of this program. CCCU offers complete online financial services, and it's a great example of how our banking decisions can make a positive impact on the Kingdom. CCCU has donated over six million dollars to ministry and mission projects in the U.S. and around the world. CCCU leverages the money their members deposit with them to help construct new church buildings, expand ministries, and help Christian business owners thrive.
Plus, each account is insured up to two hundred and fifty thousand dollars. If you're looking for a faith-based banking solution that aligns with your beliefs and values, I'd encourage you to consider Christian Community Credit Union. You can find out more at JoinChristianCommunity.com.
That website again, JoinChristianCommunity.com. All right, your calls are next. The number, 800-525-7000.
That's 800-525-7000. I'm Rob Weston. This is Faith and Finance, biblical wisdom for your financial decisions. Stick with us. We're just getting started, and your calls are just around the corner.
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This institution is not federally insured. Thanks for joining us today. Helping you see God as your ultimate treasure and money, a tool to accomplish God's purposes. This is Faith in Finance. I'm Rob West. We're taking your calls and questions today on anything financial. We've got room for you. What's on your mind today? Call right now at 800-525-7000.
Again, that's 800-525-7000. Let's go to Mississippi. Hi, Diane.
Go right ahead. Okay. I have four family members. They're in their 30s. They're single. And they make $40,000 a year, each of them. And they want to buy a house together.
Is that a good idea? Yeah. So are they?
They're related to one another, their siblings. Is that right? Yeah. Yeah.
Two are my kids and two are nephews. Yeah. Yeah.
Very good. You know, it's a viable strategy, no doubt. In fact, we're seeing a significant rise in the number of families that are doing this, just because of the incredible cost right now of home ownership. You know, of course, the benefits are obvious cost sharing, you know, you're pooling your resources. So it allows you to make it more affordable. And you know, have home ownership, you know, if it's a multifamily property, it allows each family unit to have their own space and benefit from the shared expenses.
So that might be something to look for. If it's not, then, you know, there's the obviously the benefit of just being able to pool your resources as the primary benefit. Beyond that, I would just say, you know, there's also the benefits around built in childcare and, you know, educational support, you know, it can be great to have support in a time of need, depending on what's going on. And, and then there's obviously the security issues, you know, where there's a sense of safety and numbers, I would just say the downside, which they just need to weigh versus, you know, being on their own and perhaps renting for a period of time as they build up more money, you know, to be able to buy something on their own would just be, you know, the lack of personal space and, you know, just the decision making process. So how are the decisions going to be handled? You know, do they always have to be unanimous? And if not, you know, how are we going to get to those decisions? You know, I think boundaries with regard to, especially when there's there's kids involved, and we're kind of all in each other's space, you know, financial complications as well, just in terms of, is there a disparity in terms of financial contributions or responsibilities that can lead to resentment if you're not careful there. So I think with regard to that, it really just takes a lot of thought and prayer on the front end, and then a lot of really clear and open communication before you go into it. So that we determine, you know, how are we going to handle some of these financial responsibilities? How are we going to handle the decision making and the common space? How are we going to handle an exit strategy? What if one person wants to get out of it?
How does that happen? And you need to decide all of that on the front end. But assuming that's been done, again, this is increasingly a way that a lot of folks are, you know, coming together to say, this is going to allow us to own a home in a way that we couldn't otherwise. Does that make sense? Yes, I forgot about all those other things to think about.
Yeah. So I think that's the key is really just being thoughtful before you go into it because, you know, it's quickly, you know, we, our minds go to, wow, we could buy this house and have this much space and imagine having, you know, the front and the backyard and it's going to be great. And it could be, but let's think through all the other more practical kind of daily decisions that are going to come up and, you know, just have some open and honest communication between everybody about how we're going to tackle these, because the more you do on the front end to communicate and even document kind of the approach that each person's going to take and some of the decisions will a potentially identify something that might derail it. And that's the time to find that is before you get into it, or B might just set you up for success because you've, you've had the hard conversations and you've really outlined a plan that allows us to work for everybody. So I would say yes, it's something to consider, but just mentioned to them some of the things we talked about and encourage them to really have some of those open and honest communication plans in place, and then get everything in writing.
So everybody's on the same page and we don't have unmet expectations. Thanks for your call, Diane. We appreciate you being on the program. 800-525-7000 is the number to call. Let's go to a Missouri. Hi guy.
Go ahead. You probably answered this question many times, but I don't always get to listen to all the programs, but concerning auto and home insurance, I'm sure everyone listening is probably going through the same issues, but I use an independent agent so that they can, you know, try to find the best possible policies. But just in my last renewal, like my deductible went from a thousand dollars to $2,500. And now there are some of the companies are requesting like for a hail damage, like a $7,500 deductible. It's just, it just seems like I know we're at the mercy of these companies. And I've asked my agent, you know, why is all this happening? And he kind of gives me an answer that there's just been an excess of claims. And I don't know if you have any more insight or just something maybe I've missed before.
Yeah, well, there's no doubt this is absolutely going on. I mean, there's been about a, I think the last date I saw was there's about a 20% increase nationally over a two year period in homeowners insurance premiums. And then you've got state specific increases. I don't know about Missouri specifically, but Florida, you know, has seen some of the highest increases with premiums up 7% just in one year.
That's, you know, more than four times the national average. And there it's largely due to natural disasters. And so, you know, you've got obviously hurricane issues that have led to those increases. Louisiana's one Maine is another one that has seen some pretty significant rises.
You know, it's due in part to inflation. So it's just the increased cost of labor and materials and repairs, which directly affects insurance premiums related to homeowners insurance. And then the CPI Consumer Price Index, a part of that is car insurance prices are up about 22% in the past year. You've got natural disasters, which we mentioned related to Florida, but that's affecting, of course, other parts of the country as well with severe weather events. You had some labor and material shortages in both the construction and the auto repair industry, which has affected it. Now that has largely been worked through in the last year, but we're still dealing with some of the fallout of that. And then you've got, you know, a rise in claims and repair costs. Keep in mind during the pandemic, you know, people were not driving. And so we saw a pretty significant decline in the number of auto accidents. Well, obviously, as people return to work, those went back up. And then you've got the cost of car repairs, which has surged because you've got more expensive high tech components that are driving these automobiles, which just makes it more and more difficult and costly to replace. So what do you do about all this?
Because it's not going away. I think number one is to shop around, especially if you've been with the same company for several years, often you're going to get your most competitive rates in the first couple of years. You know, you'll see a lot of this advertised, but you want to look at bundling policies. That's going to help. You mentioned this, so this may not be an option for you. But for some folks, if you haven't considered, you know, opting for a higher deductible and then putting the difference in your emergency savings, that's an option.
Look for discounts like triple A and security systems and those types of things and then just renew it and review it annually. That would be the key as well. I hope that helps, Guy.
I know this is a challenging one. Thanks for your call. By the way, phone calls are welcome and lines are open. So you have a financial question today.
We'd love to tackle it with you. That number 800-525-7000. Again it's 800-525-7000. This is faith and finance biblical wisdom for your financial decisions.
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Principal loss is possible. Foresight Fund Services LLC. Thanks for joining us today on Faith and Finance. I'm Rob West. We're taking your calls and questions. Let's head to Holland, Michigan. Hi, William. Go ahead, sir.
Hello. My question is, I recently retired for the second time. I've been blessed with a too good to fight benefit retirement, but I've got a fairly large 401k as well.
I did a good job of contributing to it, but that's such a good talk of managing it. Currently, it's just held with the same company that the company I was with, I retired with. It's just a fidelity account. I get a lot of wealth management firms calling and stuff that want to manage that money. I'm just trying to figure out if I'm better off just leaving it where it's at, or if I'd be a better steward of that if I turned it over to a wealth management company. And who would that be? How would I make a decision on who should I give that to to manage? Yeah, it's a great question, William.
You know, here's my perspective on it. I mean, there's a number of directions you can go. One of those is to manage it yourself. Another is to put it, you know, in an insurance product. I wouldn't recommend that. Another is to hire a wealth manager who can oversee it.
I think the only thing you don't want to do is just kind of leave it on autopilot. Even though the investments may have proven to be effective in the past, I do think either you or somebody else should be giving oversight to it. Not because you want to be moving in and out of the market or making changes to it regularly. But just because you want to continue to make sure that it is invested in such a way that aligns with your goals and objectives, your age, your risk tolerance, and even your values, which is a whole new kind of opportunity that exists today that we didn't even have maybe five years ago, where you can select investments that, you know, create compelling value and offer substantial returns, risk adjusted returns, but also where companies are specifically selected because they either align with your values, or at least, you know, you get rid of companies that don't. And all of that comes, you know, for most people through a wealth manager.
And you've spent obviously a lot of time building this wealth over many years. And so I think the extent to which you would pay somebody to oversee it makes a lot of sense to me. In terms of selecting that wealth manager, if that's the way you decided to go, I think the first criteria would just be somebody that you really connect with. You know, I'd interview at least two or three wealth managers just to see who you have a good rapport with. I would think you would want to know where you fall into that advisor's ideal client. Are you significantly above his tip or her typical client with regard to the assets that are being managed significantly below? Are you going to be handed off to somebody else?
And if so, who is that? What kind of communication rhythms, you know, is he or she willing to operate on just based on what's most comfortable to you? You know, that alongside just their genuine curiosity in you and what God's doing in your life so that this is not a cookie cutter type of approach, but so that this portfolio is being managed in light of, you know, God specific design and calling on your life, I think is really key. And then of course, just kind of all the table stakes from there, you know, how do they get compensated and what are their fees? What type of investments will they use and what historical performance, you know, have they seen those kinds of things I think would be important. The other piece of this is something we talk a lot about here at faith and finance, and it's just the values alignment in terms of the advisor, that this is an advisor who shares your Christian values, understands the heart of God, as we see it in scripture related to money, can really journey alongside you with regard to the decisions here, but do it in such a way that really truly reflects your values as a believer. And that's why we talk a lot about the certified kingdom advisor designation. So I think number one, I affirm the idea of hiring a wealth manager, I wouldn't necessarily just, you know, hire somebody who is the first person to contact you, I would be thoughtful about it. And it you know, I would recommend you had if not considering other advisors that you at least consider some certified kingdom advisors, so you know, that they share your values, and they've been trained to bring a biblical worldview, in addition to the experience and the character and the ethics requirements.
And in order to do that, you'd head to our website at faithfi.com, click find a professional and you could find, you know, a number of CKs there in Holland. But give me your thoughts on all that, obviously, I've thrown a lot at you. Yeah, it's, it's exactly what I thought. And it just reinforces I've got somebody in mind, that all these other companies have come forward, you know, and I'm thinking, well, maybe they can do a better job, you know, how, you know, how do I determine? But I think you hit the nail on the head when you said, you know, similar values, somebody that I personally know? Yeah, I think that's the right answer. Yeah, I think that's right. I mean, I guess the only thing to consider there, if this is just a personal friend, or, you know, somebody, you know, from church or something like that, just know that you may decide at some point in the future that you need to make a change and you just need to be prepared for that on the front end and know that if you think there's a chance that could damage the relationship, then you may want to go towards somebody who shares your values, who's not, you know, a personal acquaintance or friend or, or even a family member or something like that.
But if you feel like no, I know that I could go into this benefiting from that shared relationship, common values, and if I ever needed to make a change, I wouldn't have any problem doing that, then I would say press on, but I would just give at least a few thoughts to that before you make that decision. Does that make sense? Absolutely. Yeah, absolutely. Absolutely. Okay, great. Very good, William. Listen, all the best to you.
What are you most looking forward to in this next season? Kingdom Works. Yeah, or anything the Lord has called you to. Yeah, absolutely.
And being and having the time and the resources to do that. So. Cool.
That's great. Well, listen, all the best. If we can help further, don't hesitate to reach out. But God bless you, sir. And thanks for being on the program today. Let's go to South Carolina. Hi, Jackie, how can I help? Hi.
So I have a couple of questions. I'm about to retire. And I, I really don't have any money saved. I, I'm only going to be having social security and whatever my retirement is. And I'm trying to not actually we're going to retire this year, but I put it off another year to see if I can, you know, get a little more prepared, or transition easier into that retirement.
Hmm, yes. Have you put together a budget, Jackie, that just captures all the known income sources you're going to have, and then compares that to the actual spending you're expecting? I used to have a budget, but I don't really it's not current.
Okay, yeah, I think that's a good next step. So you said you're going to have social security and what other retirement assets will be available? I'll be retiring from teaching, but I don't have that many years. Okay, so are you going to get a small pension or what what will be available? Right, a small pension, okay. And so do you know what you should be receiving from the pension plus social security?
Do you have those latest numbers? Well, right now, it's about 1900 social, and the pension might be around 17. Okay, good. Well, that's your starting point. And I think that's your next exercise is to say, okay, I've got, you know, $3600. And what would my budget look like? And you kind of start with the big four, you got to keep a roof over your head, you got to keep the utilities on, you know, you want to keep gas in the car and food on the table, but everything else is negotiable. And that's, let's kind of rebuild that budget in such a way that allows you to determine where do you need to cut back?
And what do you need to do to make it balanced? Once you do that, feel free to call back and we can talk further. But I think that's your next step. Big thanks to my team today, Pat, Taylor and Devin, plus everybody here at Faithfi. We'll see you next time. Bye bye. Faith in Finance is provided by Faith By and listeners like you.
