Saving for a Rainy Day (and a Long Dry Spell)

The origin of the saying “Save it for a rainy day” has been lost, but the meaning remains clear. We should be frugal during “good weather” so that we have something to fall back on when times are bad. Americans understand the meaning, we just don’t seem to do it. In fact, we have it backwards.

In the chart below, compare the rates of personal savings during U.S. recessions since 1950. It’s clear that we tend to save during the rainy days and spend all we have when the economic storms have passed. The shaded columns indicate periods of recession. Note how savings rise dramatically during those periods.

The chart provided by the Federal Reserve Bank of St. Louis shows that we briefly spiked to a high of near 15% personal savings in 1975–76 to near zero in 2000-01.

To be fair, these numbers do not reflect the rate at which Americans invest long term. It only reflects our tendency to save in more liquid assets, such as savings accounts and CDs. The danger is that far too many people are only setting money aside in pre-tax retirement plans, leaving them without access to needed cash without penalty during a financial crisis such as a job loss or health issue.

In my book, The S.A.L.T. Plan, I examine God’s wisdom that enabled Joseph to prepare the nation of Egypt for a seven-year drought—the longest recorded famine in Scripture. I believe that same course of action can prepare us for an economic downturn of biblical proportion today. The two lessons from Joseph’s story in Genesis 42 are clear and remain relevant.

First, we are to save during the good years. Yet, as you can tell from the graph, our savings habits improve only during the lean years. We should view every good year that the Lord gives us as a blessing and an opportunity to prepare for unknown challenges ahead.

Second, Joseph collected and stored 20 percent of the grain harvest for seven years, or the equivalent of 140 percent of the total grain produced in a single good year. We should strive to do the same today with our personal cash resources. Given the uncertainties we currently face, we should save 140 percent of our annual income and only then begin long-term investing. In this way, we’ll be in a position to provide for ourselves, our families, and even to help others should we experience an economic event on a biblical scale, which, by the way, more than one economist has forecast.

One final note, in Joseph’s plan, the government of Egypt did the saving. The Bible says nothing about the people saving. In fact, the people were forced to pay 20 percent of their grain in taxes to Pharaoh. Later they were further compelled to purchase the grain from the government during their time of need. This important fact needs to be noted—the government did not store the grain in order to provide free handouts to its starving citizens.

We’re already being taxed substantially more than 20 percent by government at all levels. Not only is that money being spent as fast as it comes in, government is borrowing vast amounts more. Unlike ancient Egypt, our government will be hard pressed to save us in an extreme economic crisis.

My advice is to take Joseph’s plan and apply it to your personal finances. Once you achieve the 140 percent savings goal, then begin long-term investing. This will prepare you not just for a rainy day, but a very long dry season as well.

About Chuck Bentley

CEO, Crown Mininstries
This entry was posted in Handwriting on the Wall. Bookmark the permalink.

8 Responses to Saving for a Rainy Day (and a Long Dry Spell)

  1. Jon Roshko says:

    Isn’t 140% a bit excessive? So if I make $50,000 a year (I don’t), I should save $70,000 in a savings account or CD before starting a 401(k)? Even assuming I am able to save 10% of my pre-tax income (which is probably not possible), it will take 14 years to save this amount. I’ve always heard that starting a 401(k) or other retirement plan as early is possible is the best way to prepare for the future.

  2. jump7 says:

    So if you make $50,000/yr, you should have $70,000 in an emergency fund that is accessible – is that right?

  3. interesting comparison to our government and Egypts inthe time of Joseph. People need to be prepared. I pray that I will as well as my church for dry spells. I hear the Lord teaching me new ways of managing my accounts.
    thank you for your information.

  4. Johnny says:


    I’ve always valued you and your writings. I enjoyed this piece, but am finding it difficult to get my head around the 140%. I agree that it is wise, but for most folks saving that much before contributing to long-term investing (assuming this includes retirement) just seems very difficult. Never been one to enjoy math, but if a person makes $50,000 per year, they would have to save $70,000 before putting anything in a retirement fund. Am I understanding this correctly?

    Thanks for all you do.


  5. Mel Klaassen says:

    Do you think if we have a severe econimic crisis our savings will be worth anything?

  6. RHome410 says:

    I have the same concern… that cash might be worth nothing or that it might be in the hands of a bank that suddenly shuts it’s doors, like in 1929. Thoughts?

  7. Chuck Bentley says:

    Thanks for the good questions. I know it seems like a leap over the Grand Canyon at first glance. However, it is doable regardless of your income. The problem most Americans face is that they have followed traditional advice of socking away money in long term tax beneficial investment accounts before building an adequate short term or emergency savings account. The traditional strategy does not account for periods of extreme economic challenges forcing many to pull money from their investment accounts and pay a significant penalty. Yes, it seems extreme but our national savings rate is currently only 3.5% – one of the lowest in the developed world. Compare this to the average of 35% in China. I recommend building the savings account as a priority over the investment account. Remember, you can always rebalance your accounts as needed if you follow this plan. Proverbs 21:5 is the surest route to accomplish this goal.

  8. Jon Roshko says:

    Chuck – I appreciate the need for a short term savings account, but my issue is with the amount. Let’s say I’m 25 and have little to no savings. Let’s also assume I’m able to save $5,000 a year. If this number doesn’t change and I put it all in a 401(k), I’ll have about $1,400,000 by age 65 when I retire. But, if I spend the first 14 years saving up $70,000 in a savings account and then switch to a 401(k) from that point on, I’ll have about $400,000 in my retirement fund when I retire. Even with a great interest rate on my savings account, I couldn’t begin to make up even 10% of that $1,000,000 difference.

    Granted, it is not a good idea to put *all* extra income toward a 401(k), but even a little bit at a young age makes a huge difference later on. The only way I see the 140% plan making any sense is if you believe that you (or your money) won’t make it to retirement age because something catastrophic is going to happen before then. And I’m just not cynical enough to buy into that.

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