Updated: Aug 10, 2020
For most people life is cyclical, we have times of being in good health and times when we have aches, pains or illness. We have times when we are able to meet our financial needs without much worry and times when the lack of finances seems to control our lives. When we have times of good health, we need to take care of our bodies by exercising, getting good sleep and eating right, so that the times of sickness or pain will be shorter and easier to manage.
The same is true with our finances.
When we have plenty, instead of buying those things that you want but really don’t need, we need to store up those finances for family cashflow needs that may arise at future times, such as retirement or family crisis. Proverbs 6 puts it this way, “Remember the ant . . consider its ways and be wise . . . it stores up its provisions in summer and gathers its food at harvest.”
IRAs, 401ks or 403(b) are retirement tools that allow us to put money away now in a tax advantaged way to provide for cashflow needs when we retire. In most states, these funds are protected from bankruptcy or creditors so they provide a separate estate that provides security for our families. Money invested this way over time allows you to take advantage of the 8th wonder of the world, compound interest!