Y2K Financial Adjustments II

As Y2k approaches, one should do several things, but space will limit this discussion. One's cash position should be strengthened, namely, a minimum of six months of reserves (savings, CDs, money market). This is in-line with the command to save in Proverbs 21:20. One purpose of cash reserves is to help one overcome major financial transitions; e.g., job transfer, relocation, sickness, unemployment, etc. Y2K may be a fizzle but the potential warrants a stronger than usual cash position, which has always been 3 to 6 months worth in reserves. On the flip side of the coin is the debt issue. It's hard to save when one is in debt, so it stands to reason that improved money management is a must.

Another issue is the location of reserves. Does one keep reserves in the bank, under the mattress or in a coffee can. One theory that seems appropriate is to transfer all reserves into a checking account on December 31. Checking accounts fall under the category of "demand deposits" and must be readily available via banking reserves. You will need to check with your banker on the validity of this technique and whether checking accounts are subject to banking holidays. If this seems unreasonable and outlandish, remember the words "temporary" and "prudence."

Ultimately, we must make the best decision with the information we have and go from there. Informed people usually fare better than the uninformed. The worse position one can take is to be overly anxious about the results. Once we do that, an even worse scenario takes place - stepping out of God's will and His provision. He says to cast all our anxieties upon Him (Phil 4:6) because He is sovereign and provider.

Gary Ellis, MBA, CFP
Association Stewardship Director