In this series, we’ve now talked at length about leadership that must be exercised in the home in regards to the family’s finances. We’ve indicated that the basis for all financial activities and decisions is a family Budget. Saving and Investing must be part of that budget to meet unforeseen expenses and things the family cannot currently afford without taking on debt. Another important step for many is to establish an intentional and teachable pattern of Giving to meets needs of others outside of the family. None of these things is automatic or easy. They require time, effort, and communication. But to fail to do so is to fail to lead the family. In my final post in this series, I want to talk about planning for the worst.

My 17-year old son came home from work the day after Thanksgiving with quite a story. He works as a cashier for a large grocery chain, and part way through his shift, all of the computers went down…those that control the music (important during the holidays), but more importantly those that control the registers. Certainly the store had a backup plan for when something like that happens, right? Wrong! The store manager reluctantly locked the front doors, preventing anyone else from coming in. Those that were already shopping were allowed to check out through a single line, where the prices of each item were estimated based on the manager’s memory and adjusted if the customer thought his guess was inaccurate. The store, of course, could only take cash since the credit card machines were down, and that had to be rounded to the nearest dollar since the computers controlled the automatic change machines. What a mess! You’d think they would have at least had all of the prices kept on a laptop with a portable bar code scanner. But the store manager stated that he had never seen this happen in 14 years, and he obviously assumed it would never happen.

So what does your family do when the unthinkable happens?

As I continue to discuss the importance of providing financial leadership in the home, I want to point out that I am not approaching this as exclusively, or even primarily, the husband’s or father’s role. In some cases, the role of administering the family’s finances falls to the husband and in others to the wife. Some couples choose to perform the tasks jointly or interchangeably. In still others, one handles the bill paying and bookkeeping chores while the other makes more strategic decisions. This structure is often based on skills, interests, or availability, and I don’t believe that any one is necessarily better or more effective than the others. That said, both spouses must ultimately be in agreement on the choices that are made…especially in regards to the family budget (please see my earlier post regarding the importance of a Budget).

An important area where there must be thought and agreement is in Giving. Will any of the family’s income or other financial resources be used to meet the needs of others, outside of the family? It may be as straightforward as traditional tithing to one’s church or as spur of the moment as helping buy groceries for the person ahead of you in line at the supermarket who is short of cash to cover what they have in their cart. It might be contributing to the United Way at the office or directly to charities such as the Red Cross for earthquake or hurricane relief. Giving is a very personal thing. What seems a very worthy or important cause to one may seem silly or naïve to another. But the point is to share one’s resources with others in need.

Assuming a family decides that it does have an obligation or at least a desire to help provide for others, the giving must obviously be built in to the family’s budget. As we discussed in a previous post, this does two things.

As we continue to look at a leader’s responsibility to take a proactive and intentional approach to managing their family’s finances, I want to state that I do not intend in this series to focus on the critical importance of eliminating financial debt. The crushing impact of adding the cost of servicing debt (i.e., interest) to the family budget has been well documented by many authors, counselors and commentators…most notably, Dave Ramsey. And actively and aggressively working to reduce and eliminate debt will have an even larger impact on the monthly budget in the short term. But it must be done. My assumption in this series of articles is that any necessary debt elimination is built into the family’s budget.

Another critical category of the family budget is Saving and Investing. When it comes to budgeting, most of a family’s monthly expenses are known and somewhat predictable. The rent or house payment are constant each month. Purchases of food and clothing can be controlled in most cases to remain within a preset spending limit. Although the electric bill can fluctuate greatly during different times of year, prior year usage can be a good predictor of what to expect in the future, so it also is predictable. However, car repairs, medical expenses for illness or injury, or a water heater that goes out (as mine recently did) are much harder to accurately predict. So the first type of Savings that must be built into the household budget is for emergencies and unpredicted expenses. Call it, as Dave Ramsey does, an emergency fund, or just call it good old boy scout advice to “be prepared”. Regardless, if you’re buying things you want but don’t need and not saving for unforeseen expenses, you are not managing your resources well.

The second type of saving is