Ask Chuck: How to get people to prepare for more financial uncertainty

Dear Chuck,

We have so many in our church who spend money without discernment and give no serious thought to their financial future. How can I communicate a need to be prepared without sounding like an alarmist?

Worried about Freespenders

Dear Worried about Freespenders,

While I appreciate your concern, there is not a lot that you can do to give advice to those who do not want it. However, I will share what I have written regarding a similar concern, and maybe it will help you when the opportunity presents itself.

Being prepared and prudent

In 2020, I wrote a small book entitled Seven Gray Swans. It was a year of great uncertainty, with a limited vision of how we could navigate our way through a global pandemic and its economic consequences. My intent was to help others see obvious threats and make plans to avert their impact. I also wrote it to bring hope from a biblical perspective. The Bible advises us to do scenario analysis and take reasoned action. Proverbs 27:12 makes this very clear: “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.”

In his book Virtues Work, Alexander Cummings helped me to grasp the importance of the oft-overlooked and undervalued virtue: prudence. He defines it as choosing the best path to a worthy goal. It is putting reason and reality, as opposed to your emotions or wishful thinking, in charge of your decision-making. Prudence avoids impulsivity, shallow thinking, and quick decisions, which are foolhardiness, while avoiding the paralysis of indecisiveness, which leaves you at the mercy of your circumstances. Few expected the level of sustained inflation brought about by the impact COVID-19 had on the economy.

As we can see now, some were prepared for the resulting storm of inflation. Others are still suffering from ignoring the warnings.

You can introduce them to a gray swan

So, what is a gray swan? It is a term used to describe a potentially very significant event that is considered unlikely to happen but is still possible. Because there is a slight chance that the event will occur, it should be anticipated, for it could shake up the world, the economy, and the stock market. It could, therefore, greatly impact our personal economics or the direction of our lives.

Simply put, a gray swan is an obvious danger that we tend to ignore. The current inflation run-up is an example. Had we taken the risk seriously, we could have prepared before the big storm hit. Here are some practical steps to protect against gray swans or a major crisis. Perhaps you can use these to help your friends at church prepare for the unknown.

Increase your capacity to weather storms

• Save, and keep 15 months of annual income/funds in emergency savings. This is money that is not at risk of loss and is easily accessible without a penalty. This was God’s advice to Pharaoh through Joseph to prepare for the great famine of Egypt.
• Keep one month of cash on hand. Store it in a waterproof/fireproof location in your home. These funds will carry you through a disruption in online banking or any emergency that requires that you flee.
• Keep a small amount of gold coins on hand as insurance against a currency collapse.

Get free of encumbrances

• Be debt-free and in a position of financial freedom in order to avoid entrapments or obstacles that limit your freedom, mobility, and choices.
• Be as liquid as possible in order to have access to resources if quickly needed.
• Liquidity means having sufficient cash on hand to meet financial responsibilities. Maintaining liquidity above the bare minimum is considered wise in order to guard against unexpected expenses.
• Liquid assets may be cash or property that can readily be converted to cash without substantial loss in value. Illiquid or fixed assets are possessions of value that are held long-term, such as real estate or equipment.

Reduce vulnerability to loss by diversification

• Diversify investments into different asset classes via publicly traded companies or funds that perform well in scenarios of deflation or inflation.
• Hedge for downside risk by holding a small position in ETF funds that run contrary to market downturns.

Don’t conform to the world’s philosophies

• Live as if you will lose everything; it all belongs to God and is only temporarily entrusted to you. Our treasures are not on Earth but are laid up in Heaven, where they cannot be lost. This is a promise of God to those who love Him and who build His Kingdom, not their own.
• Live as if loving people is more important than loving money because it is. What we invest in others will pay eternal dividends. Gray-swan events may not cause pain or loss for you, which means you will be in a position to serve others who have been hurt. When the famine spread throughout the Roman world, as prophesied by Agabus, the disciples agreed that their best response was to send help in spite of their personal risk (Acts 11:27–30).
• Live as if you will die soon because you will — no matter how long God allows you to live. In light of eternity, life is a vapor. If you make it your goal to serve others and be a fruitful disciple, you will live with purpose and joy no matter what happens to the economy. It is liberating to realize that we have been freed from fear of death, so nothing can interrupt our relationship with God Almighty.
• Find good and godly purposes for any pain or suffering you may experience. Nothing is wasted in God’s economy, especially loss. God turns it all to good when we love Him and are called to His purposes.
• Live in the moment. Shed the shame of the past and the paralyzing fear of the future. Replace these with confidence in God’s faithfulness. It will be richly rewarded (Hebrews 10:35–36).

Consider hosting a small group or inviting folks over to discuss these important issues.

If credit card debt is a burden, Christian Credit Counselors is a trusted source of help for a debt management plan. They can help one get on the road to financial freedom.