Listen to the news reports, and Israel is headed for an economic crisis. Surging inflation means people pay more for basic goods, housing prices surged 20% over the last year, and firings in the hi-tech sector are becoming the norm. While I would take all the doom and gloom with many grains of salt, I am actually happy that there is a much-needed focus on economic issues, something that I believe is truly lacking in this country.
A lesson from the Torah
Every year when we get to this week’s Torah portion of Vayigash, I become frustrated that almost all the focus is on Yosef’s meeting with his brothers and reunion with his father, Ya’acov. Almost lost in the portion is what to me is much more fascinating: Yosef’s plan to save Egypt from famine.
“And let them collect all the food of these coming good years, and let them gather the grain under Pharaoh’s hand, food in the cities, and keep it. Thus the food will remain as a reserve for the land for the seven years of famine which will be in the land of Egypt, so that the land will not be destroyed by the famine.” (Genesis 41:35-36)
As I wrote a few years ago, I found a great analysis online of Yosef’s economic plan, written by Rabbi Yaakov Meidan, dean of Yeshivat Har Etzion, titled “The years of famine in Egypt.” Was Yosef’s plan appropriate? After all, the Egyptians managed to make it through the famine, but they did so by becoming slaves?
Biblical Joseph: Model employee?
Maybe Yosef was an example of how every employee should perform his job, doing what he needs to do in the best interests of his employer, Pharaoh, and nothing else really concerned him? The Ramban has an interesting approach: “And Yosef gathered up all the money... The Torah relates all of this in order to inform us of Yosef’s qualities of wisdom, understanding and intelligence, and that he was a trustworthy man who brought all of the money to the house of Pharaoh, and did not establish for himself hidden treasures of money in the land of Egypt or send money to the land of Canaan. Rather, he handed over all of the money to the king, who trusted him, and bought for him the land and even bodies.”
Would a market-based approach have been more successful and kept the Egyptians free? Was his approach market-based or our first foray into communism? That’s all for another column. What I want to focus on is his approach to saving. After all, Yosef’s plan was not to get carried away with the “go-go” seven years of plenty. On the contrary, he was the ultimate example of saving for a rainy day.
Straight to the duty-free shop
We would all benefit learning from how Yosef approached the seven bountiful years. How many of us put away money when times are good in order to fund those economically challenging times that we come up against? When you get a bonus from work, do you go ahead and spend it all on vacations, home improvement or buying a car?
A few years ago, I wrote about a call I received from someone who in the past I had tried to help get out of debt. I hadn’t heard from him in two or three years. He filled me in that he had stopped contacting me because his mother gave him a gift of more than NIS 2 million, and he spent it all on a home. He didn’t pay off debt or put any money into savings; he put it all into an apartment. Why did he call? Because it was just before Passover, and he had zero money and couldn’t afford to buy wine and matzot.
While this may be extreme, I could write a book on all the stories I know that are similar in principle.
You’re no prophet
Because we don’t have same level of prophecy of Yosef, we need to be extra careful to plan for bad economic times. We can do so in two distinct ways:
Emergency fund: I know I sound like a broken record, but when you need a crown on a tooth or some new tires, having that money available is a big help. Try to keep three to six months’ of expenses in the fund, and keep it liquid. The point of this money is not to make you a millionaire; it’s to have a chunk of cash readily available in case of emergency.
Long-term investing: Start thinking long-term. The earlier you start investing for the long term, the more secure your retirement will be. You can get your money working for you, and with a long-time horizon, you may be able to grow it significantly.
Let’s learn from Yosef the importance for long-term savings. Put money away, and you will be able to survive those lean years and still have enough left for a comfortable retirement.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing and is a licensed financial professional both in the United States and Israel and helps people who open investment accounts in the US.