In Case of Emergency
We know you’ve probably heard this mantra drilled into your brain over and over: One of the smartest financial moves you can make is to save money in an emergency fund. But despite all the airplay, many people still aren’t on board. According to a survey from the National Foundation for Credit Counseling, 34 percent of American adults have zero non-retirement savings.
We get it: Putting money aside can be hard when there’s plenty you could use the funds for now (a kitchen upgrade, a trip to Saint Lucia, a new car), and after all, what are the chances you’re going to need to cash in on those savings during a crisis? Higher than you might think, actually, as these seven women can attest. Emergency situations can arise just like that. By nature, they’re unexpected, but they’re not uncommon — and you don’t want to be forced to charge up your credit cards, take out a loan or borrow money from a friend or family member when they happen. Havings savings also gave these women options they might not have had otherwise. Here are their inspiring stories.
Katherine: “My savings gave me the freedom to pursue my dream.”
When I was younger and started earning an income, I saw my bank account as a way for me to buy things like shoes, clothes and daily fancy coffees. I didn't have long-term goals. My parents were terrible with money so I thought money was there to be spent. I only knew how to live and work for instant gratification and never considered having a plan B.
All my friends told me they saved, and I couldn't imagine why they’d need to. But then things turned quickly when my friends started planning a last-minute snowboarding trip in Japan. I was mortified that my budget didn’t include a cushion for spontaneity, or for thinking towards the future. So I stopped buying things I didn't need and began to save — not just for the holiday, but for the future me who wanted different and bigger things. I started to become addicted to watching the bank account go up.
My job at the time required a lot of driving and one day, on my way to an appointment, I was in a collision and my car was totaled. Because my contract required me to use my own vehicle and the company had no accident insurance, I lost my job. Within the same month, I found out I needed surgery; there was no way I could land a new position and request time off for the recovery. So for the first time in a long time my bank account went down. I didn’t have health insurance, and the surgery took a large chunk of savings, but because I’d been diligent about putting money in, I could keep myself afloat.
While bedridden after surgery, I had a lot of time to think things over, and I realized that I had never done anything I truly loved. My life had revolved around work, and I thought it was time for a change. The savings I had accumulated gave me the security and freedom to pursue other options. It gave me the ability to take control of the unexpected and follow my passions. During my time of self-discovery I developed an art style, compiled a folio, and put my work online. I soon started selling prints and doing commissions. Six months later, I’m earning an income from my art and am able to support myself by doing the things I love. I still save and work towards my financial goals and future dreams — the only difference is that now, thanks to my emergency savings, I am also able to fulfill the other dreams I forgot.
Beth Anne: “My savings helped me care for my disabled son.”
Last April, my husband and I adopted our first child, Holden, from India. Holden has a disability called arthrogryposis that, in his case, means he is unable to walk and requires extra surgeries and medical care. Having an emergency fund allowed us to travel several hours away to see an experienced orthopedic surgeon at a nationally recognized hospital. The freedom to make multiple trips and pay for travel and hotels has made a world of difference in our son's life. In addition, we've been able to pay for things like adaptive scooters and toys that help our son to be more mobile.
Our emergency fund also allowed me to cut back my hours as a nurse when my husband deployed for nine months. My son desperately needed me — both as a mom and also to support him through surgeries and physical therapy. I am so glad that my husband and I planned ahead so that I could be there for him.
Kendal: “My savings covered an unexpected tax bill — and a pet emergency.”
One year, my husband and I thought we'd determined that filing "married filing separately" would result in a lesser tax bill come April 15. We filed his taxes and were preparing to file mine, when I logged onto TurboTax early one Saturday morning to discover that we owed over $3,000. I was stunned. We ended up filing an amendment to my husband's return and filing jointly to save on our bill. But the bill was still over $2,000. Fortunately, our emergency fund saved us.
My emergency fund also came in handy during a pet emergency. When my dogs were just 12 months old, we had to take one to the emergency vet because he was behaving strangely and started throwing up blood. It took two overnight stays and one full-day vet appointment to determine he'd been choked by the other dog during aggressive play. They put him on Vitamin K and he was on the mend in no time, but the veterinary visits, IVs and tests added up to over $1,700. Again, our emergency fund helped us cover the cost and we were able to avoid going into credit card debt.
Valerie: “My savings allowed me to be with my father when he passed away.”
Common advice says you need an emergency fund to cover your living expenses in case you lose your job. What many people don't anticipate is that a death in the family can create an unexpected, urgent need for money. My father became gravely ill while I was on vacation overseas. I rebooked my return flights (original tickets were nonrefundable) and rushed to his bedside (cost: $1,200, including last minute flights). My sister and I shared a hotel room and rental car for a week (cost: $850). No one in the family was particularly hungry, but we did eat out at restaurants. My visit to the emergency room was another unanticipated expense (cost: $800, after insurance).
I was thankful that I could be with my father when he passed away. And also lucky that I had credit cards to cover the unexpected expenses, plus an emergency fund to pay the bills as soon as they were due.
Tracy: “My savings helped me recover financially after a divorce.”
Having an emergency fund allowed me to conquer little debts, so when the credit union wanted to close my joint credit account when I had been divorced for a year, I was able to take on a personal loan to cover the balance, rather than having to ask my family for a loan. My rapidly climbing credit score (thanks to being able to fix the car with a check, and pay the bills) allowed me the ability to manage my own debt and continue the journey of separating finances.
I have $1,000 in savings right now that will go towards my deductible for a new roof for hail damage last year, and I will continue to save to cover these once-in-a-while expenses.
Eulynn: “My savings saved my family from an apartment crisis.”
While living in New York City in 2011, we had a growing family and a need for a larger home. So we bought a two-bedroom on the Upper East Side of Manhattan and attempted to rent our vacant one-bedroom apartment. Despite pricing it lower than our expenses and utilizing a real estate firm, our apartment stayed unrented for six months. Without our emergency fund we would have had to try and sell our new apartment and leave the city.
A year later, my husband lost his job as the executive director of one of the largest for-profit education companies in the country. This time we didn’t have enough money in our emergency fund to stay (only $5,000) and were forced to sell our home. But we decided to do something a bit unique: We bought a 1986 RV and packed up our two young children and dog and explored the U.S. for the next three months, looking for the best city to raise a family in. (We ended up in Southern California, where my family is.)
We were careful to avoid going into debt by cutting back significantly on our expenses. Now that we’re settled, we have begun building our emergency fund back up while my husband works part time and actively raises the kids, and I run my test prep and tutoring company.
Laura: “My savings funded my start-up company.”
Early on, our accountant admonished me to sock away the maximum allowable under my company’s 401(k) savings plan (to not take advantage of the generous six percent match they offered was dumber than burning paper money in my fireplace, according to her), and to save the remaining 14 percent of every dollar in a low-fee investment account. So, 20 percent of my income went towards savings before I ever even saw the paycheck. It was a very, very smart plan that I stuck to for more than 12 years.
During that time, we had four kids to see through college, an ex-wife who required spousal support, and my husband’s company that needed funding. Despite all the expenses, I continued to save — even though my paycheck was 100-percent commission-based (on some of those leaner months, I really could have used that money for just about everything).
Jump another five years: When my position was eliminated in a corporate merger, my savings allowed me to, metaphorically speaking, become a pirate instead of re-enlisting with the Navy. I was actually able to take a leap and fund my own startup around an invention called FreshTape® (resealable tape to seal chip bags) even without investors (yet). Having that savings allowed me to have some breathing room to walk away from the soul-crushing careers that so many of my friends feel trapped in.