Read: Preparation is a powerful gospel principle. The Lord promises that "if ye are prepared ye shall not fear" (D&C 38:30).
After our obligation to pay the Lord first through tithing and other offerings, our second obligation is to work to protect our families from hardship. We can do this only if we develop a long-term perspective. In this chapter we will learn two steps to protect our families from financial hardship:
Discuss: Take a few moments to look at the Financial Stewardship Success Map. Why do you think that protecting your family from hardship is the second priority after paying tithes and offerings?
Read: By tracking your expenses for at least four weeks, you should have now identified the amount of money required for one month's worth of living expenses. Your one-month emergency fund should equal this amount.
For your one-month emergency fund, you should save cash in a safe and accessible place such as a bank account. Do not use this money for anything other than emergencies. If you have an emergency and must use money from your one-month emergency fund, immediately begin putting money back into the fund until it is full. Later, after you have paid down all of your consumer debt, you will begin to save enough money to cover your expenses for three to six months (we will cover this step in chapter 9).
You should work to build a one-month emergency fund as fast as possible. Put any extra money you have toward your emergency fund until it is complete. Even if you have debt, make only the minimum required debt payment until you have built a one-month emergency fund. To help speed up this process, you may want to find extra or better work, sell some things you can live without, or eliminate some unnecessary expenses.
Discuss: What blessings can come to your family from having a one-month emergency fund? Why should you build an emergency fund before paying down debt?
Read: How would it impact you or your family financially if one of you became very ill or disabled, or perhaps even passed away? What would be the financial impact of something like a house fire or a serious car accident? These types of hardships happen, and if we are not prepared, they can cause major financial problems. A good source of protection against possible hardship is insurance. Insurance is an arrangement in which an organization (typically an insurance agency) guarantees to compensate an individual for specific hardships in exchange for a fixed payment.
President N. Eldon Tanner taught, "Nothing seems so certain as the unexpected in our lives. With rising medical costs, health insurance is the only way most families can meet serious accident, illness, or maternity costs. Life insurance provides income continuation when the provider prematurely dies. Every family should make provision for proper health and life insurance" ("Constancy amid Change," Ensign, Nov. 1979, 82).
Discuss: Why is insurance so critical? What blessings can come from having adequate insurance?
Read: Insurance can help protect you from the financial devastation that accidents and other hardships can bring.
As a group, review the two scenarios below. Then discuss how insurance was beneficial in these situations.
Scenario 1: You were in an automobile accident and it was your fault. Your car was severely damaged, as was the other driver's. Both you and the other driver suffered some injuries and had to receive medical care. The total cost to repair both vehicles and to pay the medical bills ends up being over 15,000.