The last few days have been a whirlwind of unexpected spending: food, electronics, and, yes, toilet paper.
All of this has come with a price tag, and I see the savings accounts dropping and dropping and dropping, which makes me anxious.
My husband points out, though, that this is what we have been saving for. An emergency.
While it would be great if the COVID-19 pandemic skips over our community, leaving little impact, we can’t count on it.
We now have plenty of provisions if we have to stay in the house. Or if his elderly parents run out of food (their pantry is very small).
If I have to self-quarantine, at least I can work from home unless/until I get too sick.
We still have the big Emergency fund, in case I get really sick and can’t earn a living. Since I am on salary, that’s the only reason not to get paid I can think of. (By the way, with people being asked to postpone or cancel elective procedures, or even visits, doctors who earn money on the “eat what you kill” model will need their Emergency funds sooner. Food for thought for those who say they don’t need an E-fund because they can always work more.)
Emergency Funds should be held in cash
It makes me crazy when people say they don’t want to keep their emergency funds in cash, because it doesn’t earn enough. By cash I mean a savings account, not green bills under the mattress, by the way.
Right now, anything I invested in the market last month is worth less than if I had kept in my savings account. I’m fine with that as far as long term investing, but not for paying off my credit card.
Knowing I can pay my bills this month, despite spending 2 to 3 times my usual amount, gives me tremendous peace of mind.
Knowing my husband has access to cash to cover 6 months of our usual spending, in case I am stuck at the hospital as either a doctor or a patient, also gives me huge peace of mind. Though I’d rather not need a ventilator, thank you very much.
Emergency Funds are meant to be used in an emergency
I read recently, in an article I can no longer find, that people who work hard to save up an emergency fund become reluctant to touch it, even in an emergency.
I get it.
I put aside money to fund my emergency savings account(s), money I could have used for other purposes. I like seeing the account level at my predetermined level. I don’t like logging into my bank and seeing the level drop to 30% of what I consider to be my ideal savings.
However. If you never touch your emergency funds (for emergencies only! A Tesla is not an emergency. Neither is a Steinway, even if it is on sale), then they really don’t get to do their job. Instead of saving you from trouble, they are just a number you can look at, while you are eating random stuff from the back of your pantry, while hoping it hasn’t gone bad.
Emergency Funds can be shared
One of the other benefits of having extra money saved for hard times, is that we can be generous with others.
We were able to stock up on food and supplies. We did so, with the plan to take care of elderly in-laws. There is nothing that says we can’t also support others in our lives in need. Like friends, neighbors, food banks.
I may also use some of the money to support businesses and people whose stores or services I won’t be using while practicing social distancing. A gift certificate for a massage to use later, or cash to my hairdresser (whose appointment I will likely need to skip next month) may make a bigger difference to them than it will to me.
Emergency Funds can be rebuilt
Now I want to play the theme to the Six Million Dollar Man (we can rebuild him… better than he was before. Better, stronger, faster.)
Anyway.
Whether this all blows over or not, eventually we will eat the food we bought (or bring it to the in-laws), and use (or give away) the toilet paper we have purchased. If we have a no-spend/low-spend month or two, I can replenish those emergency funds.
Using savings to prepare for an emergency is not stupid.
When would you start using your Emergency Funds? Have you started already?