Are You Emergency Prone?

When the experts say that you need an emergency fund, they’re suggesting that you set aside some money just in case something really big comes along to through you off your well-laid financial path. We’re talking a loss of job. We’re talking an illness that has you sidelined for a few months or longer. We’re talking major unpredictable events.

Over and over I meet people who are battered by emergencies. Their tires need to be replaced. Couldn’t see that coming, right? Their 15-year-old microwave gives up the ghost. Totally out of the blue, eh? Their roof is leaking. Gosh, you mean a roof has a life expectancy too?

Most of the emergencies people site are actually events that could be predicted and planned for, with a little insight and a willingness to set some money aside for a planned expense. Truth is, most people would rather spend the money NOW! So they close their eyes to the inevitable arrival of an “unforeseen expense”, and then claim it’s an emergency.

Then there are the folks who turn their little “emergencies” into big expenses. Sure your fridge isn’t working and you need a new one. Might as well upgrade if we are getting another one. But heading out to find a shiny stainless-steel job where a less expensive fridge would do without having the money set aside isn’t an emergency, it’s an excuse to go shopping on credit. Now you’ve turned your small NEED into a big ol’ WANT and you can’t wait to scratch your itch.

People love NEW. And they love BIGGER too. They are loath to look for the less-expensive way to do things when the “emergency” has supplied them with the perfect excuse blow a wad of cash credit. When my air-conditioning in my car went recently, I headed to my local car doctor to figure out the problem. He replaced my Freon, which promptly re-evaporated. He could replace the whole system or cap the sucker before the leak but I’d only have air in the front of the van. Cost difference? About $1,000. I said, “Cap the sucker!”

Sometimes the fix makes more sense in the grander scheme of things. Yes there are times why buying new is the right solution, but it isn’t in an “emergency,” it’s when you’ve made a plan to replace whatever it is you need, done your research and saved the money you’ll have to spend.

It makes no sense to label every financial setback an “emergency” and then panic as you search for the quickest solution. Panic leads to irrational acts. Irrational acts are expensive. It makes far more sense to look at your stuff and think about it in the context of when it will likely need to be replaced. I know I’ll need another car in about 150,000 or so kilometers.  So I’ll make allowance for that in my planning. If it comes a little sooner than I expect, I’ll still be well on my way to my planned spending. If it comes a little later, all that extra time is gravy!

If you find you just can’t get ahead of all the little “emergencies” that keep cropping up in your life, you need to build a “contingency” fund into your budget.  This is a good alternative for people who just can’t seem to plan ahead. Hey, you are who you are and it’s better to accept your shortcomings as a planner and have an alternative than continue to be jolted by surprises. Setting aside some money to deal with the unexpected will not only give you the wiggle room in your budget, it’ll stop you tapping your emergency fund. Now you have a way to deal with all the unexpected expenses that keep cropping up in your life while you continue to build a safety net for the really big caca that may come along.

Your emergency fund is meant to hold you through the toughest of times, not scratch every replacement itch you get. Leave it alone so it can grow. In the mean time, take an inventory of what you have and when it’s likely to expire. Start planning to eliminate all the “emergencies” that have been draining your just-in-case fund.

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