If someone asked you why you should have an emergency fund, you might say it’s in case you’re suddenly laid off, or you drop your phone in a puddle of water, or your trusty but old car finally breaks down. And you would be right!
In fact, a few months ago my toddler dumped black cherry seltzer all over my beloved refurbished MacBook Air. After a couple days of trying to dry it out and doing all the things the internet says to do, I finally accepted that it was gone forever. I took some of my emergency fund money and ended up purchasing a Chromebook. Turns out, I love it!
And I realized something else. Sure, having an emergency fund made replacing my laptop financially easier. But it also gave me something that I needed even more.
Side Note: If you’re ready to start an emergency fund – or want to optimize the one you already have – check out my post on The Right Account To Use For Your Emergency Fund.
An Emergency Fund Gives You Confidence
My theory is this: having an emergency fund gives you self-confidence when under stress. Or think of it this way: having a financial buffer – even if it’s a small one! – gives you those few extra moments to pause, breathe, and figure out the best path forward.
Imagine the last time you were hit with a large, unexpected expense. How did you feel? For me, it was shock, anger, and fear: Why is this happening to me? This isn’t fair! And of course, What if I can’t pay this?!
But once you (and I) remember that extra cash cushion in the wings, we can create mental space for some of that calm, cool confidence to settle in. It’s in this moment where we can pause, reconnect with ourselves, and instead say, I have some money to help me out. What’s the best way to handle this?
I’m feeling calmer already. What about you?
A Confidence Case Study: The F*** Off Fund
If you’re still not sold on this idea, please refer to Paulette Perhach’s absolutely brilliant article titled “A Story of a F*** Off Fund.” Disclaimer: this article references forms of sexual harassment and violence, read at your discretion.
As Perhach argues, the absence of an emergency fund leads to much more than mounting credit card debt: it could mean a stalled professional career, reliance on abusive relationships, and spiraling depression. But the presence of an emergency fund – or as the article refers to it, a F*** Off fund – gives you the freedom to pursue a dream job, avoid abusive relationships, and quite frankly, do things that make you feel like a badass.
This is one of my favorite articles to share because it touches on so many different ways that having an emergency fund isn’t only convenient, but actually helps you become the best version of yourself. Let’s take a closer look.
An Emergency Fund Gives You the Confidence to…
Prioritize Your Health and Safety
With enough put away for 3-6 months of living expenses (or more, if your income is unstable!), you can always prioritize your health and safety over cost or convenience. That could mean moving out of your apartment early (and paying to break the lease) if you realize the building is unsafe or your new roommate isn’t a great fit after all. It could also mean buying a car in the middle of a pandemic, if you no longer want to take rideshares or public transportation anywhere.
Or maybe you’re like the girl from our case study, and you’re starting to feel unsafe in your workplace. If HR isn’t helping you – or if you simply can’t wait for the system to work for you – then you could get out now and know that you could pay for rent, groceries, and other necessities for a few months.
Take More Risks
What is something that you’ve always wanted to try, but are worried that it won’t be worth the money? Or worse, that you’ll fail at it? Now imagine if you had the confidence and resources to actually do that thing.
If you’re risk-averse like me, it can be really hard to find that confidence even once you have the resources to do it. But my mental trick is thinking of my emergency fund as a safety net for any measured risks I take – it’s there to catch me if all my other metaphorical safety harnesses fail.
So let’s be clear: I’m not saying you should roll up to the Vegas strip and blow all your money. But an emergency fund can help you dream bigger and take (well thought out) risks to dramatically improve your life. For example, post-pandemic my big dreams are:
- Moving our family to another country for a few years
- Traveling internationally a lot more…with two kids in tow
- Retiring early (click here for more!)
With an extra cash cushion on my side, I can plan out all these ideas that seem scary but are now totally doable. If you think about it, the possibilities are endless.
[Side bar: Ready to start? click here for the full how to actually build an emergency fund [insert link]!
Give More Generously
This may seem like a minor thing, but the confidence to give more generously has improved my life dramatically. Especially in these crazy and difficult times, it has been a true joy to be able to give to others without worrying if it’s “too much.” Instead of debating between a $25 or $50 donation, or whether we should give to this charity or that, we have been able to donate hundreds of dollars this year to organizations of all kinds and to friends and family affected by the pandemic.
I’m not saying that you need to give away all your money once you have an emergency fund. But once you have enough to meet the basics, it’s easier to give to those who don’t.
Be More You
Having a financial cushion gives you the confidence to be more of who you want to be. Perhach’s article sums it up this way: “Once your F*** Off Fund is built back up, with your new, better job, you pay cash for the most badass black leather skirt you can find, upgrade to the used but nicer convertible you’ve always wanted, and start saving to go to Thailand with your best friend the next summer.”
But it doesn’t have to be all about getting nicer things or going on international trips. It could also mean leaning into a job you love, but one that doesn’t necessarily pay a lot. It could also mean being able to spend more time at home with your family or pursuing hobbies, because you don’t need to worry about taking extra shifts or working for overtime pay.
Life doesn’t have to be about earning more money, and having an emergency fund gives you the confidence to say no to things that don’t align with your values. But more importantly, it gives you the confidence to say yes to what does light you up – whatever that may be!
What To Do Now
We all could do with a little more self-confidence sometimes, and the courage to put ourselves first. That might mean spending more for a safer place to live, or traveling more, or sharing more of your wealth with others. Heck, maybe it just means being able to work less and spend more time at home! Whatever it is, having an emergency fund is the first step to building a life that reflects who you are and who you want to be.
If you’re fired up and ready to finally start (or grow) your emergency fund, here are some steps you can take: