Blunt Money

If you don’t already have an emergency fund, my answer to that question is “right now”. Today. Don’t hesitate.

I got to thinking about the topic in relation to my 15 year old son. He now has a monthly cell phone bill. Does he need an emergency fund? Well, probably not in the sense that I define one, since he gets his allowance no matter what. This means that he’s unlikely to have any sort of emergency that would prevent him from paying his cell phone bill.

You see, in my book emergency funds are for paying your minimum monthly expenses if you are unemployed or your hospital bills if you’re bleeding. (And that’s it. Car repairs are not an emergency. Broken dishwashers are not an emergency. Christmas is not an emergency. I have different funds for those sorts of things, or I just wait until I have the money.) So he should at least get into the habit now of saving for specific, distant events or probabilities. Thinking about the distant future is pretty hard to do when you’re young. Heck it’s kind of hard to do when you’re not-so-young.

But the lack of an emergency fund for the first 33 years of my life probably led to more financial problems than a number of other things combined. Why did it take me so long to figure out that I needed such a thing? It was hard to wrap my mind around the idea that an urgent-seeming event like a broken clutch was NOT more important than putting funds away for a rainy day in the future. And so I went deeper and deeper into debt. It wasn’t until I could see the writing on the wall during the dot-com bust that I realized I might actually need money to live on during the extremely-high chances of becoming unemployed in the very near future. (Which did happen.) And I knew I couldn’t just go out and charge my house payment.

Thank goodness I learned about emergency funds in the nick of time. I would have lost my house and been a whole lot more than just worried if I hadn’t. But I can’t help but wonder how different my life might have been if I’d learned about and implemented an emergency fund in my teenage years. Of course I knew that it was good to “save money for the future”. But that was such a vague notion. I needed something concrete to get me started. What if I’d learned that having a few hundred dollars on hand for car repairs would be good? Or that having money on hand in case I was invited on a trip out of state meant that I could go without frantically trying to earn extra money? That might have laid the foundation for a true emergency fund, and kept me on the path to financial health.

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