When it comes to guidance about saving money, the Bible uses the word “fool” to describe two extremes—not saving anything and saving too much.

In the first case, we’re told it’s foolish not to save: “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has”—Proverbs 21:20.

On the other hand, in the parable of the rich fool, Jesus cautioned against saving too much: “Then he told them a story: ‘A rich man had a fertile farm that produced fine crops. He said to himself, What should I do? I don’t have room for all my crops. Then he said, I know! I’ll tear down my barns and build bigger ones. Then I’ll have room enough to store all my wheat and other goods. And I’ll sit back and say to myself, My friend, you have enough stored away for years to come. Now take it easy! Eat, drink, and be merry! But God said to him, You fool! You will die this very night. Then who will get everything you worked for?’”—Luke 12:16-20.

The more common form of foolishness

It’s safe to assume that more people are on the not-saving-enough end of the savings spectrum than on the saving-too-much end.

Federal Reserve research indicates that many people live paycheck to paycheck. According to its most recent “Report on the Economic Well-Being of U.S. Households, nearly half (46%) of all Americans say they could not come up with $400 to pay for an emergency expense without having to sell something or borrow the money.

Practical steps

If you find it difficult to save, here are three keys to building a financial reserve.

  1. Open a separate savings account.
    Earmarking some of the money you keep in a checking account as “emergency savings” typically doesn’t work. Mingled money leaks. It gets used for other purposes. Establishing a separate account dedicated to emergency savings is much more effective.

    Keep in mind, the purpose of this money isn’t to generate a high return; it’s to be readily accessible should an emergency arise. So, you don’t want your emergency fund tied up in investments that are not liquid (e.g., real estate), nor ones that could lose value in the short-term (e.g., stocks). Good ol’ savings accounts are usually best. (Currently, credit unions and online banks offer better interest rates than traditional brick-and-mortar banks, although 1% is about the best rate you will find.)
  2. Make savings a priority.
    There are five things you can do with money. You can spend it, pay debts with it, save it, invest it, or give it away. The order you choose makes a tremendous difference.

    With every dollar you receive—before you spend any of it—commit to giving a portion and then saving a portion. That’s an effective, biblical approach to prioritizing your use of money.
  3. Make savings automatic.
    If you have to make the decision to save only one time—when you set up an automatic monthly transfer from checking to savings—that’s emotionally easier than having to decide anew whether to save each time you receive some money.

    While the Bible isn’t specific about how much to keep in savings, it makes sense to maintain a reserve large enough to handle some of life’s tougher financial circumstances, such as an extended period of unemployment. Aim for stocking an emergency fund with enough savings to cover three to six months’ worth of essential living expenses.

Too much of a good thing

It may be more common for households to have too little in savings than too much, but there are some folks who take saving too far. Be honest with yourself. Would you say you base your sense of security or happiness, at least to a degree, on the amount of money you have in reserve? Deciding where the line is drawn between wise saving and foolish hoarding is not so much a matter of money as it is a matter of the heart.

Once you have an adequate emergency fund, such as six months’ worth of essential living expenses in a savings account, we recommend that you change your focus from saving to investing, but that’s where you may be tempted to overdo it and build bigger barns.

With all the scary headlines about many people not saving enough for their later years, and with healthcare costs looming as a great unknown, it’s easy to fall for the lie that you can never have too much in your retirement accounts. Just as saving too little can be detrimental, so can building up your savings if it becomes a preoccupation that causes an overemphasis on frugality, even at the cost of strained relationships. If that describes you, here are three recommended steps.

  • Take this issue to the Lord.
    Ask for wisdom and greater faith in God’s provision and protection. Read, reflect on, and memorize verses, such as Psalm 91:2 (“I will say of the Lord, ‘He is my refuge and fortress, my God, in whom I trust.’”).
  • Seek accountability from a trusted friend.
    Ask your friend to pray for you, and give them permission to ask how you’re doing in this area from time to time.
  • Give serious thought to your future needs.
    Use the retirement planning software from SMI Advisory Services to determine an appropriate amount for you to save for the future. Having a personal financial plan that takes into account multiple possibilities can relieve anxiety about the future. Ideally, the process will lead you to a conservative target that provides peace of mind—one that ensures you save enough, but also protects against needlessly saving too much. Such a plan can also allow you to be more generous.

Remember, it’s good stewardship to maintain a reserve of savings so you’re prepared for many of life’s inevitable twists and turns. The Bible says it’s foolish not to keep some money set aside, but equally foolish to let the good habit of saving money go too far.