Mechanics of Savings and Financial Intermediation
Savings as described by financial analysts are the portion of income which are not used for consumption expenditures. They are referred to as investments, because huge portions of such savings in financial institutions constitute the capital extended to businesses, governments, individuals and other entities as loans. This is done through the process of financial intermediation. Financial intermediation involves three key parties, the Surplus Economic units, the Deficit Economic Units and the Financial Institutions. The SU’s are the economic units that their current income exceed their current consumption expenditure thereby leaving them with more funds. The DU’s are the economic units that their current consumption expenditure exceeds their current income thereby arousing their desire to borrow to supplement their income. The SU’s and the DU’s do not have direct contact, rather a medium or some kind of intercession is provided by financial institutions. Both SU’s and DU’s can be governments, private individuals, businesses or firms etc. Savings is an important factor in any economy and as such its role can not be overemphasized.
What the Bible says about Savings
The Bible teaches that saving money is a wise practice for many different reasons. God is our source and provider for everything we need.
“And my God will meet all your needs according to the riches of his glory in Christ Jesus” (Philippians 4:19). One of the main ways God provides for us is through money, and it is our job to steward that money well (Matthew 25:14– 27). We are accountable to God for how we use everything He gives us in this life, including money. Saving money demonstrates good stewardship of the resources God gives us. Saving money allows us to be prepared for the future, and being prepared for the future is good. Proverbs 6:6–8 shows us that this principle is lived out even in nature: “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and its food at harvest.”
Planning ahead and saving money makes it easier to accomplish goals and allows us to be more effective in ministry (see 1 Corinthians 16:2). When we don’t plan ahead and save money, we are more prone to go into debt, which the Bible tells us is unwise (Proverbs 22:7). Of course, there are plenty of wrong motives for saving money. If we’re saving money out of
fear of the future, it shows we’re not really trusting God to provide (see Luke 12:7; 2 Timothy 1:7). Miserliness is sin, and it’s foolish and arrogant to make money our security. “The wealth of the rich is their fortified city; they imagine it a wall too high to scale.” (Proverbs 18:11), yet riches “will surely sprout wings and fly off to the sky like an eagle” ( Proverbs 23:5). 1 Timothy 6:10 warns against greed, saying, “The love of money is a root of all kinds of evil.”
Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” To fully understand the value of saving money,
we must remember what the Bible says about giving. God desires His people to be cheerful givers (2 Corinthians 9:7). It’s impossible to out- give God! “Give and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For the measure you use, it will be measured to you” (Luke 6:38). Sometimes when God gives us things, be it money or something else, it’s intended for us to give away. Other times, He gives us things that are meant for us to keep for ourselves and use in His service and for His glory. It’s wise to hold everything God gives us loosely so that we can give it away if He asks us to.
More Study Texts:
Proverbs 6:6-8
1st Corinthians 16:2
Proverbs 21:20
Proverbs 13:11
Proverbs 10:4-5
Proverbs 13:22
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