The sad reality for savers is that emergency funds exist to be spent.
I missed last week’s post! There was a draft written, I felt good about what I was getting into, and then our dog got sick. Well, he had been sick, but he took a turn for the worse.
After a few days of seeming ill, we took him in to see his normal veterinarian, who suspected pneumonia and prescribed medication that seemed to clear up his symptoms. And then quite suddenly last Sunday, he appeared to have a stroke. He couldn’t walk normally, he was falling down and running into things, and then he threw up three times in ten minutes.
It was after 10:00 p.m., and we knew this was urgent, but our vet works out of a small shop and doesn’t have evening hours. We had no choice but to take Eddie to an emergency vet. After five hours, he was diagnosed with pancreatitis, prescribed three new medications, and released back into our care.
The good news is that our awesome little dog is back in good health! He is acting like his old self, and all of the symptoms that were really worrying us are gone. The bad news is that emergency vet visits are not cheap.
This is not an expense we were expecting. There is no “$500 emergency vet visit” line item in our monthly budget. Yet, I didn’t freak out at the expense in the moment, and I didn’t let it eat me up with worry after the fact.
Now, this is the part where I talk about the benefits of emergency funds: for instance, why it’s a good idea to have money set aside for random but inevitable expenses. I could share how my wife and I decided on the amount of cash to have on hand, and built up our emergency fund little by little, setting aside some from every paycheck. I could blog about our plan to replace the funds that we used to cover this expense. But that isn’t the part of this experience that stood out to me.
What stood out is that I did not freak out about spending that money. By way of contrast: two years ago, the day after I graduated with my Master’s degree, I ended up in the emergency room with appendicitis. Though I had health insurance, the surgery that followed was another experience that did not come cheap. And even though that was another example of a time when I had no choice but to spend the money (and there was money to cover the expenses), my anxiety distracted me from recovery.
I spent a lot of time regretting that I was in a situation where I had to part with my money. Instead of being grateful that I could cover the bill in cash, or being proud that I had the money set aside for just such an instance, or accepting that, over time, the emergency funds would be replaced, I was deeply upset that the money had been spent at all. In a sense, my appendicitis—which was diagnosed and cured in 18 hours—became a month-long illness, because I spent the weeks following my surgery stewing and worrying about the money I “lost.” In truth, my anxiety about using my emergency fund colored all of my interactions with money for the rest of the summer, breeding more stress.
After comparing the two situations here are a few of my takeaways:
- Your overall mental health plays a huge part in how you deal with adversity.
This may seem obvious, but it is not always evident when you are the person struggling with anxiety. It can feel like you’re just being logical about money and the role it plays in your security.
Two years ago, I was a walking ball of frustration and anxiety. I had an external locus of control and felt like the world was something happening to me. Getting appendicitis felt like validation that the world in fact was happening to me, and that the world sucked. With this mindset, of course I didn’t deal well with parting with my money. I felt like my money was being taken from me, a hapless victim, and that my situation was precarious.
Today, I’ve been in counseling for a little more than a year, I have a daily meditation practice, and I am the proud owner of a much more internal locus of control. I am able to identify the consequences of my own actions: both the negative, including giving in to my anxiety, and the positive, in choosing to be grateful. But being able to identify what I’m responsible for also makes me better able to deal with the things that do “just happen.” In the instance of Eddie’s emergency vet visit, I was totally present during our conversations with the vet, and chose a course of treatment that made sense for Ed’s illness with no angst about the cost.
- Unexpected, unavoidable expenses will happen. Make sure you can cover them.
You need an emergency fund. According to this Bankrate survey, only 37% of Americans could deal with a $1,000 expense from savings. Another 23% could deal with an emergency that size from reducing their other spending.
Look back at the last five years. Over that period of time, how many large emergency expenses came up? I can think of three unexpected, unavoidable expenses of at least $300.
Car accidents, health emergencies, job loss. Shit happens. Save your money now so that you have it when you need it.
- When you’re in the middle of an emergency, there’s no need for additional stress (about money).
I was worried enough about my dog’s health. This was our dog’s first health issue, and it was scary. I’m glad that in the moment I was able to focus on getting him healthy, not what the treatment was going to do to our bank accounts.
Two years ago with my appendicitis, instead of focusing on getting healthy, I went on to do damage to my mental health by obsessing over the cost of it all. Getting cut open sucks enough, I didn’t need to fixate on my savings at the same time.
A sizeable emergency fund is a prerequisite to financial success. Disasters happen and they rarely occur at convenient times. If you don’t have an emergency fund, set one up. But if you do, don’t think that you’re set. If you aren’t prepared to actually spend that money, then you have some work to do. Why is it scary to part with that money? It could be a sign that you’re living a little close to the edge, and need a larger emergency fund for your own peace of mind. Stashing away even a few extra dollars from each paycheck is certainly a self-soothing strategy.
If anxiety is something you are dealing with daily, and it affects how you live your life, seek out a professional therapist or counselor. I personally took that step and found someone with experience treating individuals with anxiety. It’s one of the best things I’ve ever done for myself and my loved ones, and it’s fundamentally changed my relationship with money.