Rising Food Prices

Several news sources have been reporting ongoing food shortages and resulting rising food prices.  In fact, the UN food and agriculture organization just reported that world food prices are at their all time high (since they started tracking prices 20 years ago).3

Unfortunately, home storage is not likely to completely blunt rising prices.  Even if you lived completely on your home storage, you would eventually run out and have to start replacing at the higher prices.  There are several things you can do, however, to maximize your money and utilize your home storage to give you extra savings in these circumstances.

1) Wait for sales.

Having a good  home storage allows you to pay attention to sales and purchase only when items are cheaper than they might be at regular prices.  When you already have a good supply on hand, you can ride the waves and maximize your funds.

Several years ago a bucket of wheat climbed to $25 in our area.  Because I had a good supply of wheat, I didn't need to replace my wheat right away.  In fact, a year or two later, prices dropped down to $14 a bucket which was the lowest I'd seen.  I was able to wait and replace when prices were low.  Here's another example:  I like to buy refried beans when they drop to $.50 a can.  Instead of the normal yearly sales, prices seemed to continue climbing.  I had almost decided that it was time to replace anyway when I noticed an advertisement for $.60 a can.  I paid a bit more, but at least I didn't have to pay the regular price of $1.19.

Now you have to be careful about doing this.  You can get burned by waiting when prices just continue to climb.  I try to keep a minimum amount on hand, replacing those minimums at the higher prices if necessary so that I won't be caught without a good supply of food.

2) Be aware of WHY food prices are rising.

Wheat prices are very volatile.  Disease, drought and/or flood in different parts of the world affect crop prices.  When wheat prices went up several years ago, I was aware that there were some drought-issues affecting wheat prices.  I was fairly confident that these weren't long-term issues, that wheat crops would return to their normal levels and that I could wait to replace the storage that I had used.  In fact the next year was a bumper crop and prices dropped to new lows. 

By the way, there is a usually a delay before rising/lowering prices hit the market, so you may have to wait to see the price changes.  The wheat crop this year has suffered from both drought and flood so prices will be going up in the future.  My neighborhood store, however, still has wheat buckets from last year's inventory and prices are still good.

There is a cascade effect that happens when commodity prices increase.  When wheat prices go up, so do pizza, bread and cereal prices.  Recalls can also affect inventory and pricing.

Knowledge gives you buying power!

3) Maximize your education and skills.

Inflation, unfortunately, is real.  Prices will continue to climb.  One way that you can ensure that you stay on top of rising prices is to maximize your salary potential.  Keep your job skills current.  Get extra education when possible.  Make sure your spouse is doing the same.

Obtaining high levels of education and skills mean in tough times you will be more likely to keep your job and/or find a job.  In two different circumstances, I competed with 70 and 90 other candidates for a job.  I was hired and told afterwards that in both cases I was different than every other applicant because I had two bachelor's degrees in related fields.  Additional education made all the difference in the opportunities presented to me.

Those with the most education usually have the highest paying jobs and often the best job security.4   Make sure you are able to adjust and adapt to a changing world with rising prices by always learning and gaining new skills.


Want some good news?  Rice, milk, and meat prices are down.2   Ice cream prices are also down.1  It's a good time to stock up!


More on the importance of education:
http://iprepared.blogspot.com/2009/03/education.html

Sources:
1 - Rising food prices sour Utah families
2 - Food inflation isn't in every grocery aisle
3 - World food prices hit record highs
4 - Education equals job security

financial reserve

It has been a rough week financially for us. Two weeks ago we replaced our house phone system. Our air conditioner, which had been broken for more than a month, was finally fixed last Tuesday. Four days later, our 13 year-old washing machine finally quit working. Since then, my computer modem died and last night my husband informed me that the garage door was no longer closing correctly.

Total cost of repairs: Almost $2500!

But the peace that came from knowing we would be okay because we have a financial reserve: Priceless!

financial goals

We haven't spent very much time dealing with financial goals on this blog. I am by no means an expert when it comes to financial matters. I have however, been taught by wise parents and try to follow the counsel of the prophets.

Some of the goals that we've discussed have been relatively straightforward, such as saving some money from each paycheck. However, others such as avoiding/eliminating debt may take some time, change, and discipline. Take time to get your finances in order. It might not happen in a month or a year, but decide now how you will accomplish these things and get moving. :o)

Here is a summary of our financial goals:

*Pay tithes and offerings.
*Save some money from every paycheck.
*Avoid debt.
*Use a budget.
*Teach family members.

Success in these goals will ultimately result in a financial reserve and no debt, which will bring an amazing amount of peace into your lives.

family home evening lessons on finances

Here are some lesson materials that could be used (or adapted) for a family home evening on finances:

Tithing - FHE Resource Book, 227

Managing Family Finances - FHE Resource Book, 210–211

Work - FHE Resource Book, 231–32

Financial Responsibility - Young Women Manual 2, Lesson 46, 175–78

Managing Family Finances - Duties and Blessings of the Priesthood: Basic Manual for Priesthood Holders, Part A, Lesson 21, 153–59

Managing Family Finances - Marriage and Family Relations Instructor's Manual, Lesson 8, 35–40

Temporal Wealth and the Kingdom of God - Teachings of Presidents of the Church: Brigham Young, Chapter 32, 234–41

education

Stress the importance of obtaining as much education as possible. (All Is Safely Gathered In: Family Finances)

All around us, families are currently struggling to make ends meet. Those with more education seem to have better job security in these hard economic times. It is important to stress the importance of getting as much education as possible to our children. The quotes below emphasize how important education is. Once again, our children learn more from what we do than what we say. Your example is huge here and it's never too late to go back to school.


It is the obligation of every woman of this Church to get all the education she can. It will enlarge her life and increase her opportunities." (President Hinckley, October 2006)

. . . Rise up and discipline yourself to take advantage of educational opportunities. (President Hinckley, General Conference, October 2006)

You need all the education you can get. Sacrifice a car; sacrifice anything that is needed to be sacrificed to qualify yourselves to do the work of the world. That world will in large measure pay you what it thinks you are worth, and your worth will increase as you gain education and proficiency in your chosen field. . . The Lord wants you to educate your minds and hands, whatever your chosen field. Whether it be repairing refrigerators, or the work of a skilled surgeon, you must train yourselves. Seek for the best schooling available. Become a workman of integrity in the world that lies ahead of you. I repeat, you will bring honor to the Church and you will be generously blessed because of that training. There can be no doubt, none whatever, that education pays. Do not short-circuit your lives. If you do so, you will pay for it over and over and over again. (President Hinckley, Ensign, January 2001)

"Complete as much formal, full-time education as possible, including trade schools and apprentice programs. This is money well invested. Based on potential lifetime earnings, the hours spent in furthering your education will be very valuable indeed. Use night school and correspondence classes to further prepare. Acquire some special skill or ability that could be used to avoid prolonged unemployment. The ability to do basic home and auto repairs can frequently be helpful, as well as a source of family savings. Periods of unexpected unemployment can happen to anyone. We should not allow ourselves, when we are out of work, to sit back and wait for “our type of job” if other honorable interim employment becomes available." (Elder Ashton, One For The Money)

kids and money

You have a powerful opportunity as a parent to teach your kids about money management by allowing them to have or earn some. I noticed in "One For The Money" that Elder Ballard stated, "Much has been said over the years about children and monthly allowances, and opinions and recommendations vary greatly. I’m from the “old school.” I believe children should earn their money needs through service and appropriate chores. . . I think it is unfortunate for a child to grow up in a home where the seed is planted in the child’s mind that there is a family money tree that automatically drops “green stuff” once a week or once a month."

We used to give our kids an allowance until I read this quote and it made sense to me. So, we've been transitioning away from giving an outright allowance. Instead my kids do all of their chores for the whole month before I'll pay up. We also have made sure that they have responsibilities in our family that are not tied to money. We do this so they'll understand the importance of working together to benefit the family (without expecting financial compensation).

Remember that your example is the most powerful teacher. If you tell your kids to manage their money carefully, but then they see you spending recklessly, they'll remember what you do more than what you said.

Here are some of the ways our family handles kids and money:

*Budgeting - Label jars and help kids to separate their earnings into tithing, savings, fun, mission, etc. We did this until our kids were around eight years old.

*Bank Skills - Let your kids open a checking account in a "family" bank. Mom and dad control deposits and withdraws and help kids to learn how to record these on a bank sheet. This works better than the jars with older kids and higher volumes of money. This also teaches about balancing a check book. My kids still keep a tithing jar/envelope.

*No Credit - We don't EVER allow our kids to buy on credit (or a promise that they'll pay us back) even if they're sure that they'll have enough money "tomorrow." We emphasize that if they'll have the money tomorrow, then they can wait until tomorrow. If they do have enough money in their "account" they can use the Mom bank to withdraw money and spend it.

*Work Opportunities -Post extra jobs (and money amounts) on a steel door, fridge, or magnetic board. Kids can move the job/amount under their name as they complete the jobs. I pay my kids for these extra jobs twice a month. (I printed a bunch of "job" words onto cardstock, mounted them on magnetic paper and covered with strips of packing tape. Then I cut them into small words. See picture above.)

*Encourage Saving - Help kids save to a certain amount/goal and then match. My oldest saved up for 2/3 of the cost of a wii, we paid for the rest. This was his first big financial goal. I was pleased to help him get rewarded for patience and saving. I intend to offer a dollar for dollar match for all money that goes towards educational or mission savings.

*Money Incentives - Give money for good grades or other goals. We set up an incentive for one of my boys who was struggling with turning in assignments. Because we wanted drastic results, we offered $5 if all of his assignments were turned in each Wednesday. He's made drastic improvements, earned some money and we're gradually going to reduce this incentive. My parents gave us $5 for each "A" grade.

*Family Councils - We involve our kids as we discuss financial priorities. They help us determine things such a family vacation locations based on how small/large our budget is. We're also pretty honest about our current financial situation. My kids know about our family savings account (and why they don't have finished bedrooms in the basement).

This is a great website with more great ideas:
http://life.familyeducation.com/money-and-kids/personal-finance/34481.html

[I'd love to hear your ideas. Please comment and share how you teach your kids about money.]

goal 3(e) - teach family members

Teach family members the principles of financial management. Involve them in creating a budget and setting family financial goals. Teach the principles of hard work, frugality, and saving. Stress the importance of obtaining as much education as possible. Abundant resources are available—from classes, to books, to other resources such as One for the Money: Guide to Family Finance. (All Is Safely Gathered In: Family Finances)

The example you set, the lessons you teach, and the work and budgeting that you do as a family will all have a lasting effect on the future decisions of your children. Make a goal today to involve your children in your financial decision making and budgeting process; model good money management; and take the time to teach them about money.

budgeting methods

There is not a right way to budget. There are many different methods. The most important thing is that you have a budget. Here are some possible ways to budget:

Use a computer program - There are several commercially available budgeting programs that can hold your hand through the process of creating a budget. Quicken & Money seem to both have the weakness that budgeting seems to happen after you've spent your money. Unless you're creative it is also difficult to carry money over in different categories from month to month.

Use a spreadsheet - I've never done this. But it's the method that many use in order to easily carry overage amounts from month to month.

Use a notebook - This is the method modeled by my parents. It is essentially like using a spreadsheet, but you are doing all the calculations. No need for computer skills with this method.

Use cash & envelopes - Distribute budgeted amounts of cash into category envelopes. You can determine how much money is available throughout the month by counting what is left in the envelope. This method is tricky for those who use bill pay, don't like having a lot of cash on hand or enjoy earning rewards on an always-paid credit card. There are computer programs that mimic this concept, but do it virtually (and reduce the disadvantages listed above). I am currently researching these programs.

goal 3(d) - use a budget

Keep a record of your expenditures. Record and review monthly income and expenses. Determine how to reduce what you spend for nonessentials. Use this information to establish a family budget. Plan what you will give as Church donations, how much you will save, and what you will spend for food, housing, utilities, transportation, clothing, insurance, and so on. Discipline yourself to live within your budget plan. A budget worksheet is a useful tool to help you with your plan. (All Is Safely Gathered In: Family Finances)

There are so many ways to create a budget. It is a personal choice as to which method you will use. One recommendation that I want to make is that you manage your finances together if you are married. Communication is essential in staying within a budget. Be kind and respectful to each other as you discuss money. Try to understand the other's priorities, needs, and wants before you judge the other's thoughts on budgeting. By making decisions together, both of you will be committed to and more likely to stay within your budget.

I personally use a computer-based budget program. My husband and I discuss and agree to the budget allocations together. By keeping a financial reserve, we've been able to weather several unexpected expenses.

Do you have any budgeting tips that you'd like to share?

more on avoiding debt

From Provident Living:

Spending less money than you make is essential to your financial security. Avoid debt, with the exception of buying a modest home or paying for education or other vital needs. If you are in debt, pay it off as quickly as possible. Some useful tools in becoming debt free are a debt-elimination calendar and a family budget worksheet.

We must learn to distinguish between wants and needs. We should be modest in our wants. It takes self-discipline to avoid the “buy now, pay later” philosophy and to adopt the “save now and buy later” practice.

Elder Joseph B. Wirthlin taught: “All too often a family's spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress” ("Earthly Debts, Heavenly Debts," Ensign, May 2004, 42).

We should avoid debt. There is nothing that will cause greater tensions in life than grinding debt, which will make the debtor a slave to creditors. A specific goal, careful planning, and determined self-discipline are required to accomplish this.

President N. Eldon Tanner taught: "Those who structure their standard of living to allow a little surplus, control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage” ("Constancy Amid Change," Ensign, Nov. 1979, 81).

maka fekes

This is a picture of a maka-feke or an octopus lure. You might remember President Monson's talk from April of 2006 when he talked about maka-fekes. Here is what he said:

"Tongan fishermen glide over a reef, paddling their outrigger canoes with one hand and dangling the maka-feke over the side with the other. An octopus dashes out from its rocky lair and seizes the lure, mistaking it for a much-desired meal. So tenacious is the grasp of the octopus and so firm is its instinct not to relinquish the precious prize that fishermen can flip it right into the canoe. . . Today we are surrounded by the maka-fekes which the evil one dangles before us and with which he attempts to entice us and then to ensnare us. Once grasped, such maka-fekes are ever so difficult—and sometimes nearly impossible—to relinquish. To be safe, we must recognize them for what they are and then be unwavering in our determination to avoid them."

President Monson then discussed several maka-fekes in our lives. Debt was the final maka-feke that he talked about:

The final maka-feke I wish to mention today is one which can crush our self-esteem, ruin relationships, and leave us in desperate circumstances. It is the maka-feke of excessive debt. It is a human tendency to want the things which will give us prominence and prestige. We live in a time when borrowing is easy. We can purchase almost anything we could ever want just by using a credit card or obtaining a loan. Extremely popular are home equity loans, where one can borrow an amount of money equal to the equity he has in his home. What we may not realize is that a home equity loan is equivalent to a second mortgage. The day of reckoning will come if we have continually lived beyond our means.

My brothers and sisters, avoid the philosophy that yesterday’s luxuries have become today’s necessities. They aren’t necessities unless we make them so. Many enter into long-term debt only to find that changes occur: people become ill or incapacitated, companies fail or downsize, jobs are lost, natural disasters befall us. For many reasons, payments on large amounts of debt can no longer be made. Our debt becomes as a Damocles sword hanging over our heads and threatening to destroy us.

I urge you to live within your means. One cannot spend more than one earns and remain solvent. I promise you that you will then be happier than you would be if you were constantly worrying about how to make the next payment on nonessential debt. In the Doctrine and Covenants we read: “Pay the debt thou hast contracted. … Release thyself from bondage.”

Photo Source

goal 3(c) - avoid debt

Spending less money than you make is essential to your financial security. Avoid debt, with the exception of buying a modest home or paying for education or other vital needs. Save money to purchase what you need. If you are in debt, pay it off as quickly as possible. (All Is Safely Gathered In: Family Finances)


Make a goal now to reduce and ultimately eliminate any consumer debt that you might have. Include in that goal a resolution to not incur any new debt. If you can't pay cash for it today, then don't buy it.

We've tried to take this counsel to heart and have avoided debt as much as possible. We do have a house payment and some educational debt, but haven't incurred any debt beyond that. We never put an expense on a credit card unless we can pay for it that month. We have a modest home, hand-me-down furniture and used cars, but also have the peace that come from a small financial reserve and only carrying minimal debt.


I enjoyed this post on the same topic at I Dare You To Eat It. She has some great suggestions on how to save money and reduce debt.

more on tithes and offerings

I wanted to include some modern revelation on the topic of tithes and offerings:

Pay Tithes and Offerings - Successful family finances begin with the payment of an honest tithe and the giving of a generous fast offering. The Lord has promised to open the windows of heaven and pour out great blessings upon those who pay tithes and offerings faithfully (Malachi 3:10 and Isaiah 58: 6–12).

Tithing - If our tithing is the first obligation met, our commitment to this important gospel principle will be strengthened and the likelihood of financial mismanagement will be reduced.

Fast Offerings - On fast day, we go without food and drink for two consecutive meals, if physically able, and then give to the bishop a fast offering at least equal to the value of the food not eaten. If possible, we should be very generous and give more. The bishop uses the fast offerings to care for the poor and needy. (All Is Safely Gathered In: Family Finances)


"How grateful I am for the law of tithing. It is the Lord’s law of finance. . . It comes of His wisdom. To every man and woman, to every boy and girl, to every child in this Church who pays an honest tithing, be it large or small, I express gratitude for the faith that is in your hearts. I remind you, and those who do not pay tithing but who should, that the Lord has promised marvelous blessings (see Mal. 3:10–12)." (President Gordon B. Hinckley, Ensign, January 2002)


"Some of you have money problems. I know that. There is never enough money in your homes. I know that. You are struggling to get along. What is the cure? The only thing I know of is payment of tithing. Now, that doesn’t mean that you will have a Cadillac and a mansion. But it was God who made the promise that He would open the windows of heaven and pour down blessings upon those who walked honestly with Him in the payment of their tithes and offerings, and He has the capacity to keep His promise. It is my testimony that He does keep that promise” (President Gordon B. Hinckley, Oahu, Hawaii, regional conference, 18 Feb. 1996).


Glorious is the promise of the Lord concerning those who pay their tithes. He says in modern revelation that they “shall not be burned” (see D&C 64:23). His great promise is found in the words of Malachi. Said He: “Will a man rob God? Yet ye have robbed me. But ye say, Wherein have we robbed thee? In tithes and offerings. … “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it” (Malachi 3:8, 10). And then He goes on to say something very interesting. Listen to this: “And I will rebuke the devourer for your sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast her fruit before the time in the field, saith the Lord of hosts. “And all nations shall call you blessed: for ye shall be a delightsome land” (Malachi 3:11–12).

While tithing is paid with money, more importantly it is paid with faith. I have never met an individual who paid an honest tithe who complained about it. Rather, he put his trust in the Lord, and the Lord never failed him. . . With the payment of tithing have come innumerable blessings as the Lord has promised. I was married during the Depression, when money was scarce, but we paid our tithing, and somehow we never went hungry or lacked anything we needed. (President Gordon B. Hinckley, General Conference, April 2007)

goal 3(a) - pay tithes and offerings

Successful family finances begin with the payment of an honest tithe and the giving of a generous fast offering. The Lord has promised to open the windows of heaven and pour out great blessings upon those who pay tithes and offerings faithfully (see Malachi 3:10). (All Is Safely Gathered In: Family Finances)

Paying tithes and offerings is a deeply personal and religious decision. But I would be remiss if I didn't include it as the foundation of financial preparedness. In the Old Testament in Malachi 3:10 it talks about a promise that comes to those who pay their tithes and offerings. Malachi records, "Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it."

I have personally experienced the opening of those windows of heaven. Throughout our lives, we have always been committed to paying our tithes and offerings. We've not been rich (though we truly ARE rich compared the most of the rest of the world), but we have always had everything we needed. Even in graduate school when money was very scarce and odd jobs provided little money, we always had enough to make it from month to month. I know that God was fulfilling that promise found in Malachi during those years. We honestly have more blessings than I can count and I attribute that in large part to paying our tithes and offerings.

I know that many of the readers of this blog are members of many different faiths. For The Church of Jesus Christ of Latter-Day Saints, a tithe constitutes 10% of your increase. A tenth is not just an arbitrary amount but comes from the Holy Bible (Genesis 28:22, Leviticus 27:32, Hebrews 7:22). Fast offerings are made by going without two meals (usually once each month)and then giving the cost-equivalent to help feed and clothe the poor.

family home storage: a new message

When the new program for Home Storage was introduced in 2007, I was pleased to have some new specific direction. However, it was an adjustment to change some of my thinking about food storage. It took me a while to change gears and update and adjust my storage habits. I really enjoyed this new article from my March Ensign. It addresses the changes and need to change our thinking specifically. And notice that once again, it specifies that we should achieve the first three steps before moving onto the fourth. Here is a snippet:


Family Home Storage: A New Message

Check the expiration date on your ideas about home storage. You may need to throw some of them out.

A New Approach
. . . In the spirit of President Hinckley's ("We can begin ever so modestly. We can begin with a one week's food supply and gradually build it to a month, and then to three months." General Conference, October 2002) remarks, Church leaders decided to closely reexamine their approach to self reliance, looking for ways to reinforce the concepts of home storage and financial preparedness. As a result, the Church published the pamphlet All Is Safely Gathered In: Family Home Storage, outlining new guidelines for home preparedness that give Church members a simplified, four-step approach to building their home storage.

They are as follows:
1. Gradually build a small supply of food that is part of your normal, daily diet until it is sufficient for three months.
2. Store drinking water.
3. Establish a financial reserve by setting aside a little money each week, and gradually increase it to a reasonable amount.
4. Once families have achieved the first three objectives, they are counseled to expand their efforts, as circumstances allow, into a supply of long-term basic foods such as grains, legumes, and other staples.

Of the new guidelines, Presiding Bishop H. David Burton says, "Our objective was to establish a simple, inexpensive, and achievable program that would help people become self-reliant. We are confident that by introducing these few, simple steps we can, over time, have more success." . . .

The Time to Begin Is Now
"Perhaps in the past accumulating a year's supply of food may have been a little intimidating and even illegal in some places," says Dennis Lifferth, managing director of Church Welfare Services, "But this new approach asks us to do the best we can, even if all we can do is to set aside a can or two each week. If the prophet asks us to do something, we can find a way to fulfill the commandment and receive the blessings."'

"This new program is within everyone's grasp," explains Bishop Burton. "The first step is to begin. The second is to continue. It doesn't matter how fast we get there so much as that we begin and continue according to our abilities."

don't neglect your financial reserve

Have you been successful in gathering your three-month supply and a water supply? You might feel tempted to move onto longer-term storage and skip storing a financial reserve. If so, please reconsider and don't ignore the importance of a financial reserve as part of your home storage.

I wrote a previous post on this topic, which contains quotes that indicate that your water supply, three-month supply and financial reserve should be the first priority for home storage. Here is one of those quotes:

"Where do I start? -- Start by adding a few storable items that you typically eat, storing some water that is safe to drink, and saving some money, if only a few coins each week. Then over time, expand these initial efforts—as individual circumstances allow and where permitted—by storing a longer-term supply of basics such as grains, beans, and other staples."

We will start setting longer-term storage goals soon enough. Given the world's economic situation right now, it makes sense in so many ways to make storing money as much of a priority as storing food.

[from the FAQ page found at http://providentliving.org]

cash on hand

In the article, Out Of The Ashes, (New Era, May 2004), San Diego teens discuss their experience surviving and then cleaning up the California wildfires of 2003. They include several preparedness tips that they gained from their experiences. Their first tip is to keep some cash on hand. I think this tip is applicable and important in almost every emergency situation. I similarly recommend that you keep a small portion of your financial reserve as "cash on hand."

How much? Again, this is very personal. I try to keep a small amount in several locations such as in the car, in each 72-hour kit, in my purse, and some in my home. We also keep a jar of change. All this cash adds up. I already find that I turn to that cash (and then have to replace it) in minor emergencies. In major emergencies, banks might be closed, ATMs run out of money, and if electricity is out, stores can't take credit cards.

It's also important to have your cash reserve in small bills. You may remember in a post about Hurricane entitled, Prepared In Houston, that the author was forced to pay $5 extra because the stores couldn't make change for her. So even $5 bills may be too big. I recommend that you keep $1 bills and/or change on hand.

how much is a financial reserve?

We recently used the talk, One For The Money, by Elder Marvin J. Ashton as the basis for a Family Home Evening Lesson. As I prepared that lesson, I read the following quote, "Liquid savings available for emergencies should be sufficient to cover at least three months of all essential family obligations." I think three months worth is a pretty good beginning goal. I've heard some financial planners state that we should save at least six months worth. Some try to have a one year supply of finances as well as food.

You probably have a sense of how secure your job is -- though no job is completely secure. I think that knowledge coupled with the guidance of the spirit can help your family decide how much of a financial reserve you need.

At first glance, you might assume that three-months' worth of savings is a huge amount. And I guess it is, IF you make tons of money already. But for the rest of us, the amount is not as big as you may first think. If the amount of money saved is used to replace your salary, many normal monthly costs would not apply. For example, you probably already paid your tithing on money in savings (so no need to subtract 10%). Also, retirement, taxes, social security, medicare, and state taxes would not be taken out of your savings (this would differ depending upon your state/country). If you add up your normal bills for each month, minus any services that you could immediately cancel like cable, cell phones, lawn services, gym memberships, etc. (I'm assuming that you would cancel everything that you were able to -- but don't forget those "contracts" that bind you to a service for several years), then you can figure out what you would need to save for a month's worth. For our family, the amount we needed to save "essential family obligations" was roughly half of my husband's normal paycheck per month.

In many cases, this financial reserve may not end up being used to replace salary. It might be needed in an extreme health care situation. Or it might prevent you from having to use consumer debt when your clothes dryer, dishwasher and toilet all break on the same day (which happened to us yesterday). So obviously more is better than less.

[variation on a previous post from 8.11.2008]

goal 3(b) - financial reserve

Our current goal is creating a financial reserve.

Goal:
Save a little money from each paycheck.

Choose a savings vehicle. This can be a savings account, a regular bank account, or just a jar in your closet. Make sure that this account is low risk and liquid (which means that you can easily pull from it anytime without penalty). I personally wouldn't count money saved in retirement accounts, pensions or stocks. It's too hard to get immediate cash from these sources.

Start this week to save money in that "account." Are things really tight? Start with $10 a month. Even tighter? Then save $1 a month. The idea is to make saving money a habit. And don't touch that money unless you're starving! :o) This reserve is for emergencies only. A dress that is on sale, the need to pay your kids an allowance, or piano lessons do not constitute an emergency. The time to turn to this money is when you are out of work and have run out of money (or other similar emergencies such as medical etc.). Make it a goal to leave that money alone. Increase the amount as your income allows.

I personally use a bank account and have an automatic transfer set up. Each time we get paid, a small amount is automatically transfered into my emergency savings account. I've been amazed how quickly money has accumulated in that account. If this sounds like something that would work for you, then call or get online and set up that automatic transfer today.

From All Is Safely Gathered In: Home Storage:
Establish a financial reserve by saving a little money each week and gradually increasing it to a reasonable amount.

From All is Safely Gathered In: Family Finances:
Gradually build a financial reserve, and use it for emergencies only. If you save a little money regularly, you will be surprised how much accumulates over time.

And From President Gordon B. Hinckley:
“Set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts” (Ensign, Nov. 1998, 54).

family finances

I know that many of you are still working on your three-month supply and/or water supply. Keep it up! Don't stop because we are shifting gears. Acquiring these items takes time. Keep your lists in hand and purchase things as you are financially able.

For the next while, our goals are going to center around financial preparedness. Don't worry, this is not going to be an elaborate or difficult-to-understand tutorial on financial terms or economics. Instead, we're going to focus on one main goal and five easy anyone-can-do suggestions to help us be financial prepared. These come from a pamphlet released in 2007 by The Church of Jesus Christ of Latter-Day Saints, titled All is Safely Gathered In: Family Finances. These goals make up a sound financial preparedness plan that are beneficial regardless of your religion.

Here is the message found within:

Dear Brothers and Sisters:

Latter-day Saints have been counseled for many years to prepare for adversity by having a little money set aside. Doing so adds immeasurably to security and well-being. Every family has a responsibility to provide for its own needs to the extent possible.

We encourage you wherever you may live in the world to prepare for adversity by looking to the condition of your finances. We urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt. Pay off debt as quickly as you can, and free yourselves from this bondage. Save a little money regularly to gradually build a financial reserve.

If you have paid your debts and have a financial reserve, even though it be small, you and your family will feel more secure and enjoy greater peace in your hearts.

May the Lord bless you in your family financial efforts.
The First Presidency

I love the promises at the end of this message. I have personally experienced the peace that comes from financial preparedness. Hopefully as we set goals in regards to financial preparedness, you'll be able to find that personal peace as well.