“Do not save what is left after spending, but spend what is left after saving.”

Warren Buffett

I do not mean to insinuate Warren Buffett is “an ancient” but he is timeless in his wisdom. His words on saving and investments are inspiring. Saving money is the cornerstone of a sound financial plan. It takes hard work to be disciplined about saving money but rewarding us with financial flexibility. By making saving a priority, you are more likely to achieve financial success.

Key Reasons To Save Money

  • Help to achieve our financial goals.
  • Pay our bills on time and in full so we don’t need to raise our debt amounts.
  • Provide an emergency cushion for unpredictable costs.
  • Set aside funds for our children’s college tuition and for our retirement.
  • Make investments as the best way to build wealth and be financially secure.

Here, we revisit ancient views of saving money from timeworn texts and stories. Surveying these words adds a different perspective on finances. There is a common thread across varying beliefs on how we can save, avoid overspending, and invest for a better financial future. Please see the Ten Commandments of Personal Finance for other areas of interest.

Ten Commandments of Saving Money:


1. Spend Within Your Means

Saving money is an important financial habit to adopt. According to a CareerBuilder report, 78% of American workers are living paycheck-to-paycheck.  Even those with higher incomes of at least $100,000 (nearly 10%)  are having trouble making ends meet.

I grew up in a modest household that saved conscientiously. My mom reminded us often that our needs exceeded our wants and we had to be careful about spending. As a young girl, I didn’t always understand why we were having financial problems. Later on, I learned that my parents were setting up a small retail business that took a long time to get off the ground. Savings became part of our mindset from then on.

Control thy expenditures.”

To set aside money for saving and investing, you may need to cut some costs. To control your expenses, assess what your necessary living needs are. These are predictable monthly fixed costs such as mortgage payments or rent, property taxes, utilities, car loans, typical grocery bills, credit card payments, and any costs you pay monthly. Remember these costs are for our needs, rather than for our wants and desires.

Be reasonable about satisfying your every want. For example, that 10% raise on your $80,000 salary may not significantly help you to buy that luxury car (or chariot in ancient times) you have been eyeing. A rise in earnings may not fully accommodate every gratification we seek.


2. Build A Healthy Emergency Fund

As a result of the coronavirus pandemic, we have seen a record number of people become jobless as the economy has dramatically slowed. Although there have been federal stimulus packages that have added to state unemployment benefits, there is no guarantee this aid will be ongoing.

We are facing a huge economic downturn which has seen new job losses of more than a million people for 19 consecutive weeks. All of this has caused substantial financial stresses.  For those reasons, having an emergency fund is a necessity to pay for basic living expenses for at least 6 months if not a year. Having readily accessible funds in liquid funds such as money market securities helps you avoid having to borrow money.

Joseph’s Emergency Funds

Emergency funds as a prudent strategy appear in Genesis 41:34-36. In this passage, Joseph interprets Pharaoh’s dream about seven fat cows grazing by a river swallowed up by seven skinny cows. Joseph views the seven fat cows as seven prosperous years for Egypt, followed by seven years of famine. As a result of planning for this disaster, Joseph advises Pharaoh to store grain during the good years to be used in the following harder years. Save when you have more for those times you have less due to job loss, illness, or some crisis.

Adopting a habit of saving more provides you with more flexibility to allocate into investment and retirement savings. Begin by setting aside small amounts of savings of $1,000 but don’t stop there. Tough times prove that amount is inadequate. Don’t think of these savings as wasteful assets. Rather it is a means to avoid higher debt levels. As Proverbs 13:11 tells us, “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”

Having Liquidity is Key

Liquidity refers to your ability to easily convert assets into cash with little to no loss of principal. When your resources are liquid, you have the financial ability to pay for unexpected costs such as a loss of job, death in the family, or your roof is leaking.

Monetary assets are among the most liquid of assets. These assets include cash, cash-equivalent securities or money markets, treasury bills, savings bonds, savings, and checking accounts. True, you won’t earn much income as interest rates are near zero but you avoid having to use your credit cards with borrowing rates in the mid-teens.  Liquid assets can be used to support your fixed monthly expenses for 6 months or more. Here are two benchmarks to use:

Liquidity Ratio= Monetary Assets/ Monthly Expenses

Your monetary assets should support your fixed monthly expenses such as groceries, rent or mortgage, utilities and car loan for 6 months. A 6 ratio means having six months of monetary assets to pay for your basic needs of food, rent, utilities, and car loan, if necessary.

 Emergency Fund Ratio

The liquidity ratio is linked very closely to emergency funds. This is essentially a cash fund for emergencies in unforeseen events such as job loss, death in the family, unexpected surgery or immediate house repair. It works by using a targeted number of months that you believe is ample enough to support you through emergencies. If you are looking for 6 months or higher (and this is highly recommended) to set aside in one fund that can be invested in a high yield savings account or in money markets, then:

Emergency Funds Ratio= 6*Monthly Expenses

This ratio will give you a targeted amount of monetary assets needed to be comfortable for the possible emergency. If your household generates less predictable income, you need to set aside more than 6 months for a greater cushion. For more financial ratios that you can use as benchmarks see our post here.

3. Pay Yourself First

Start thy purse by fattening

George S. Clason, who wrote The Richest Man in Babylon, is believed to have coined the term “pay yourself first.”  That means you should put away at least 10% of every paycheck into savings. Start to save small amounts working your way up to 20% of income to allocate into retirement savings investment accounts. The initial savings can be allocated to an emergency fund amounting to at least 6 months coverage for essential living costs. Unforeseen events are unpredictable and undesirable but need to be planned for.

Once this fund is established, use some of your savings stash to invest for retirement and taxable investment accounts. Putting away some money may be difficult at first depending on your spending habits.

Savings should be one of the most important parts of your household’s financial goals. Adopt a “Pay Yourself First” attitude. Your monthly budget should call for savings to be at least 10% of gross income.

Savings Ratio = Savings/Gross Income

Savings refer to money in the bank, liquid funds, deposits, money markets, and other liquid funds, such as your emergency fund. Gross income is your total source of income on your budget, and includes what you earn, side businesses, bonuses, dividends, and interest income.

Your savings rate should be at least 10% of gross income. This is difficult to do when you first start to work. As your salary or what you make rises, it should get easier to put money away for savings. A healthy savings ratio of 20% would be a bonus (pardon the pun).

4. Track Your Spending By Budgeting

Spending more than your means is a bad recipe that leads to borrowing more. It is far more profitable to save money and allocate to investments that yield 5% returns or more than having to borrow at mid-teen rates with credit cards to pay for your overspending habits. “Whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty.” (Proverbs 28:19).

Track your spending carefully by budgeting according to your priorities. Bava Metzia 42a instructs us, “A person should always divide his money into three: one-third in the ground (for the future), one third (invested) in business, and one-third in possession.” That may be an ancient way of splitting your funds. There are several ways to budget such as tracking your expenses, creating a monthly budget, or using the 50/30/20 rule. The latter budget is Elizabeth Warren’s rule of thumb using 50% of aftertax or net income for your needs, 30% of net income for your wants, leaving 20% for saving money, and paying debt.

Budget In Any Reasonable Manner

Budget in any reasonable way that allows you to control your spending. It is easier now than ever to track your spending using a variety of (free or fee) apps such as Mint, Personal Capital, PocketGuard, and YNAB for zero-based budgeting.  Alternatively, scrutinize your credit card bills and build your own excel spreadsheet.

I have noticed that our spending has changed dramatically during the pandemic. Our bills for grocery and household goods are higher than usual. On the other hand, we have savings from cutting out retail shopping, dining except for occasional outdoor places, hair salon appointments, gas, tolls, as we are staying closer to home. While I appreciate the extra cash, I am anxious like everyone to go back to some sort of normal existence.

5. Avoid Lifestyle Inflation

As our income grows, we often increase our so-called “essential costs” leading to lifestyle inflation. While we are allowed the occasional latte and extravagant dinners, we need to keep our spending in check. You shouldn’t deprive yourself of everything. However, fulfilling every desire is no longer a special treat.

“Keeping up with the Jones”  and conspicuous consumption often refers to material goods we may accumulate so as to fit within a certain social class we admire.  We compare ourselves to our neighbors or colleagues at work.  As a result, people fall into the trap of spending for a better car or house simply to enhance their prestige and social standing. This may be costly and divert resources that can be plowed into investing your money for greater long term wealth.

It is pretty common for people to spend their raise and bonus as soon as they receive it. I have often been tempted to buy something special upon getting a raise and bonus after a year of working hard. You soon realize your pay hike is pretax and shrinks on an after-tax basis. If you do need some things, make a list of what you believe is important if you had some extra cash.

Overspending And Materialism

Overspending leads to materialism and lifestyle inflation that is hard to maintain. Mishlei Proverbs 13:7 tells us, “There is one who feigns riches but has nothing; one who feigns poverty but has great wealth.”  According to Psalms 128:2 “You shall eat the fruit of your effort–you shall be happy and it shall be well with you.” This reminds me of another favorite book, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko.

Stanley and Danko profiled and compared millionaires in two categories: those who were under accumulators of wealth (UAW) and the prodigious accumulator of wealth (PAW). The UAWs were individuals who had a low net wealth compared to their high income because of spending to maintain their status. On the other hand, PAWs managed their wealth better, often living in blue-collar neighborhoods and buying used cars. It is an eye-opening account of the good and bad money habits of the wealthy.

 6. Bargain hunting or Shopping Addiction?

Shopping is often a fun activity to do do with friends or on our own. Marketing experts count on our emotions when we shop. Be aware of the biases we wear when shopping. Retail expert Mark Elwood has written about the psychological benefits of seeing bargains. He points out that stores like Best Buy use Goldilocks pricing or three-tiered pricing which ranges from low-to-high prices. The store is hoping you will buy the middle option with higher pricing than the low-end but not necessarily feature-worthy enough to pay more.

We should not pay list price for anything but make sure it is a real bargain. There has been a lot of worthwhile academic research about bargain hunting being a form of shopping addiction. For many of us, there is the thrill of getting a deal, irrespective as to whether we wanted that particular item or not.

Impulse Shopping Vs. Compulsive Shopping

Overspending when shopping can cause financial difficulties if you are subject to impulse or compulsive shopping. There is a difference between the two but are often used interchangeably. Impulse buying happens more frequently when a consumer has a sudden urge to buy on the spot without much deliberation. We all do this from time to time. Compulsive buying, on the other hand, happens where one experiences an uncontrollable urge to buy. That urge may be triggered by negative feelings which are relieved by that purchase. This may be more like a shopping addiction that potentially needs therapy before financial hardship occurs.

7. Compounding Growth

Start saving for retirement in your 20s through your employer’s sponsored 401K plans. Deposits in small amounts in retirement accounts made regularly benefit from tax advantages and compound growth over a long horizon. Automate this savings out of your paychecks. As such, your contributions are tax-deferred. Employers often match a portion of your contributions. This is like extra money you can earn from your company. Separately, establish an IRA (Roth IRA) for further retirement savings. Target your contributions to amounts capped by the IRS for maximum growth for retirement. Avoid withdrawing from these accounts as you may then trigger penalties and taxes you will need to pay.

As a goal, try to contribute to your 401K plan to the maximum level which is $19,500 in 2020.  Some years it may be hard to do, especially when you experiencing a job loss. Resist withdrawing money from your retirement account as there is usually a 10% penalty tax to do so before you turn 59.5 years. As a result of the CARES Act, it is easier to withdraw funds up to $100,000 during 2020 from certain tax-advantaged 401Ks and traditional IRA  accounts without penalty if you are eligible. That said, withdrawing this money will put in a dent into your retirement fund that will be painful later on.

One of my favorite quotes in The Richest Man is this: “It behooves a man to make preparation for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he no longer be with them to comfort and support them.”

Compounding Works Best When Investing Early

The power of compounding interest, linked to the time value of money, will benefit you the most if you save and invest early. Let your earnings accumulate and grow rather than withdraw money from your accounts. It makes a big difference if you start saving for your retirement 10 years later than your friends or if you invest for 10 years and then stop contributing to your 401K retirement account. It is difficult if not impossible to catch up by doubling the amount if you start investing later on.

As soon as your child is born, start saving for college through a 529 plan. These plans vary but are available in virtually every state. Like retirement accounts, they have deferred tax benefits and may have contribution limits. Check with your respective state program for details.

 8. Make Savings A Priority

Saving money is hard work and not necessarily natural for many of us. To make it a good habit, take steps to automate your savings. Most banks will allow you to automatically transfer a set amount of money from one account to another account. Your employer will be able to automatically deduct a percentage or a set amount of your paycheck to deposit into accounts such as retirement or investment accounts. Essentially, you are adopting a “pay yourself first” attitude so that you can allocate money into different buckets, especially for unforeseen expenses.

Motivate yourself to proactively save by setting short term and long term goals. In recent years, there have many headlines about insufficient savings by Americans for years. As the outbreak of the virus caused lockdowns, most of the country stayed home. The personal savings rate rose dramatically to an unusual 32.2% in April 2020 as consumer spending dropped significantly. Over time, it will likely come down to the more normal 7%-8% range. Spending versus saving is a common trade-off with lots of tension. Reduce spending you can’t afford. For other money trade-offs we have written about, visit this post.

Saving As A Good Habit…How Long Does It Take?

I had always heard that it took 21 days to break a bad habit. As a member of Weight Watchers, which is ALL about breaking bad eating habits (and it definitely works for as I am down 30 pounds and declining!) they always refer to the 21 days. However, I did not know of the 21-day origin.

The 21-day time frame dates back to nearly 70 years. Dr. Maxwell Maltz, a 1950s plastic surgeon found that it would take his patients about 21 days to get used to seeing their new face or post-amputation, they would still sense a phantom limb. Dr. Maltz wrote about his own adjustment period to changes and new behaviors to form a new habit….”.it requires a minimum of about 21 days for an old mental image to dissolve and a new one to jell.”

There is more research that indicates that it takes a longer time to form a new habit than 21 days. A 2009 study published in the European Journal of Social Psychology by Phillipa Lally, a health psychology researcher at University College London, indicated it took 66 days on average (in a range of 18 days to 254 days) to form a new habit.

Whether 21 days or 66 days, it takes significant time, effort, and determination to create a new habit.

What About Savings Challenges?

I have been skeptical about savings challenges. Like diets, they work for many and can be fun, especially if you do so with others. The question is whether the challenge can result in having long term effects. I think any challenge that can motivate someone towards a good habit with lasting results has my endorsement. There are so many good savings challenges to consider. I tend to favor the 52-week challenge which may help you build some money along with good habits. On the other hand, the no-spend month reminds me of a fasting diet and seems too difficult to attempt for most people with families and/or busy lives.

I often have turned to using cash only and leaving my credit cards behind. Paying for meals at restaurants or window shopping without cards has rewarded me by limiting my consumption to the cash I am carrying. I am not a big shopper nor particularly enjoy going into stores unless I am going purposefully for a specific outfit or electronics. My daughter, Alex is often upset with me, encouraging me to buy something for myself. She wonders why I don’t love shopping as much as she does. Now that she is working two jobs that she loves this summer, she has become quite a hoarder herself and has asked me about my stock picks. (Okay, I am proud of her!).

9. Don’t Obsess About Money

Maintain balance in your life that isn’t solely based on wealth accumulation. According to Proverbs 21:20, “Precious treasure and oil are in a wise man’s dwellings, but a foolish man devours it.”  While no one seeks to become poor, there are dangers of solely wanting to be rich. “Keep your lives free from the love of money and be content with what you have.” Hebrews 13:5

Rev. Martin Luther King Jr. worried about the obsession of money in his famous speech, called False God of Money. He said, “We attribute to the almighty dollar an omnipotence equal to that of the eternal God of the universe. We are always on the verge of rewriting the Scriptures to read, ‘Seek ye first money and its power and all these things will be added unto you,’ or ‘Money is my light and salvation, what shall I fear.”

King himself lived frugally, leaving little money for his family. However, he saw other goals like working hard, investing in education, and having faith as far more important.

Price Versus Quality

Being financially secure is important. The alternative is stressful. However, don’t be frugal for frugality’s sake. Consider price versus quality in your buying considerations. The cheapest thing may not be of the best value. Certainly, there are some items that I don’t care about except for paying the best or cheapest price such as convenience products for the household. I like buying private label products such as Kirkland sold in Costco which I know have been discounted from the branded items.

However, quality matters more when you are buying furniture, mattresses, a car, or home. We have been burned by looking to get a bargain and not balancing quality. Buying solely on a price basis is foolish for these types of products or services that I intend to use for a while. That doesn’t mean I am averse to getting a bargain by negotiating.

10. Be Charitable

According to Jewish law, it is forbidden to impoverish one’s wealth by the distribution of all of one’s wealth to charity. However, one can leave one-third of his estate to charity in his or her will. A minimum of one-tenth of one’s income belongs to God per measure handed down from the Patriarchs as Jacob himself said to God, “Of all that You give, I will set aside a tenth to You” (Genesis 28:22). Giving 10% of your net income annually is a virtual goal. Those who can, should.

According to HW Charles in The Money Code: Become A Millionaire With The Ancient Code, “Those who love people acquire wealth so they can give generously, after all, money feeds, shelters and clothes people.”

We should strive to be as generous as possible to those in need.

Final Thoughts

Ten commandments of saving money are inspired by scriptures that are timeless. Sometimes ancient words remind us that money management was always a challenge to be conquered.  Choose success by your actions in saving money as a first step to be financially secure. There are tradeoffs in every financial decision you make.   I know that these days have been difficult for many because of the coronavirus outbreak. It will take time to get back to normal given the still raging health crisis and an economic downturn. In the meantime, stay healthy.

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