Why I Broke Up With My Emergency Fund

0:05Welcome to the Wealthy After 40 podcast, the show for Gen X women and couples who are ready to ditch financial stress and feel confident about retirement. I'm your host, Dailene Higgins, money coach and retirement strategist to help you gain clarity and confidence with your money by creating a spending plan that aligns with your financial goals and dreams so you can spend intentionally, save consistently, and feel at peace about your future. Join me every week to understand your money, simplify your decisions, and take intentional steps toward the life you want.

0:47Welcome to the episode. I'm excited to explain why I broke up with my emergency fund.

0:57Sarah:And I hope this helps you in more areas than just an emergency fund. So if you're somebody that's like, oh, well, I already got that and you are going to skip past me, don't do it. This is really just about how I was able to navigate past some traditional advice that didn't work for me. That is the big takeaway from this episode. And as I share my story, my thought process, I hope you can apply it to whatever area you are being challenged with right now. and to support you in those areas, in those financial foundations, I would love to have you join me in my Retirement Ready Workshop. This is being held April 4th, so if you're listening to this afterward, you can still go to the link that I'll mention in just a minute to find future dates.

2:02Sarah:Head over to elevatefinances.us backslash workshop. This is a three-hour live workshop active, we're interacting, you'll get some coaching. We are looking at your numbers foundationally and in readyment for retirement. I don't know if readyment is a word, but in getting ready for retirement, we look at all of your numbers. I help you put that in, understand why. We run some calculations. From those calculations, I help you define what your area of focus should be. So if that sounds of any interest to you, head over to elevatefinances.us backslash workshop and join$55, three hours. It's on a Saturday.

2:54Sarah:Yeah, I hope you'll join me. It kind of gives you some clarity around the messy middle you're in, kind of. You're in the middle of it and you're like, I just don't know what I'm doing. I'm juggling so, so much and I don't know what to do. I don't know what to focus on. This workshop is for you. So back to the topic of why I broke up with my emergency fund. It was a good thing. It was a good thing. But I'm just going to tell you very quickly, as a financial coach, I do help clients fund an emergency fund. So hang on, hang tight, listen to my story. So if you've listened to my money journey story, I've shared that in depth kind of along the way.

3:41Sarah:But while I was on the very early beginnings of this money journey, as I was putting together all of my financial foundations, getting everything in order, really using my budget, really enhancing my savings, I get to the emergency fund. And at that time, I'm using blogs, podcasts were, I don't even know if they were around. So I'm reading all the blogs and the majority of the advice, majority of the definitions are to save three to six months or six to 12 months just in case of job loss. That is your emergency fund. That did not make any sense to me. I was in a position, very gratefully, that there was a less than a 1 % chance I was going to lose my job, unless I did something erroneous, or the world ended, I guess.

4:36Sarah:But anyways, that caused the confusion. I know I need to say for emergency fund, this is what they're telling me it's for, did not compute, did not commute. Now, I did believe I needed an emergency fund, but trying to define it, get to the definition was where I was being challenged, was where I was trying to take a standard piece of advice and apply it to my personal life. I want you to think about that with the challenges you're having. so as I'm just you know mulling it over thinking through it I'm like okay well what other emergencies because if I'm saving for a job loss and that never happens what about these other areas and those other areas for me were what if something big happens with the house meaning what if there's a sewer line break what if my furnace goes out my water heater those types of things what if my car breaks down and it's still cheaper to fix it than to replace it, but I don't have any money.

5:51That's when I started realizing an emergency fund is a multitude.

5:59Sarah:It's all encompassing, right? Collectively, it will work together, but I need it. I need it. And you may need to as well. and it's what I teach my clients, is to save for those individual emergencies. Because if I tell you to save for a homeowner's emergency fund and you're renting, it doesn't make sense. So it's that when I started realizing I have emergencies that are going to happen. Not likely job loss, but it's going to be in these other areas. As I defined those areas for myself, home, medical, car, it felt so much easier to put money aside because I knew when I could use that money. Now, I know there are a lot of individuals I've talked to and they're like, well, I have a stash of money, but they're still floundering.

7:08Sarah:They're still trying to take care of all of the things and they've got a nice chunk of change somewhere else, but they've never defined how it's going to support them. We have to know what our money is set aside for. We have to know what its purpose is. Whether we're spending it now or saving it now, there's still a purpose. But that was when I realized if I define it specifically for the things that I could anticipate, that I could believe were going to happen, a few of them have happened, a few of them have been there, then it makes sense to set that money aside. And it was so much easier. It was so much easier.

7:59Sarah:So I want you to think about you, an emergency fund, retirement savings, how you're spending anything. And you know the traditional pieces of advice out there and you're wrestling with it. I want you to think through that and see how you can make it personalized for you. That is why money is called a personal finance, because it is personal and it becomes customized. Every step along the way should fit you and not you fit it. And like I said, emergency funds do matter, but they matter in the context of what are they for. And so when I defined each and every single one of those, I then realized I needed to set aside some money, every paycheck that would support those three buckets.

9:10Sarah:They are still a budget item for me today. They are still growing. They are still being used. They are still supporting me in multitudes of ways. I have mentioned that last fall, my husband had two heart attacks back to back. My medical fund, my emergency fund is what got us through that. It is what got us through that. I'll tell you what else. Those emergency funds helped us. Recently, the insurance premiums raised. I was like, what am I going to do? What am I going to do? My emergency funds, shifting those. So if you listened to last week's episode, where I talk about emergency funds will help you from taking on debt, even though you're setting them aside for X, Y, Z, they become a powerful decision maker for those unexpected, the truly unexpected expenses.

10:22Sarah:You're shifting, you're moving, you're being able to explore things with this money that you've set aside. Don't get so caught up in the fact that this is exactly for this, this is exactly for this. They are going to collectively support you when any challenge arises. And I think that's the clarifier. We can anticipate our emergencies. We can think about, well, I'm going to have to repair the roof or replace the roof or if a sewer line breaks or mishap or something. But if it's something like an insurance premium increase or something out of the ordinary that you didn't even anticipate, this money can still support you.

11:12Sarah:So yes, we want to be specific about what it's for, but then when we truly have an emergency, we truly have an unexpected expense, be able to use it to keep yourself moving forward, to be able to stay, what I hear from clients a lot living the lifestyle you currently have. That is what emergency fund also helps support. So thinking through your situation and setting up your quote emergency fund, it needs to match who you are, what you are, and what you need. it's not about just standard traditional advice and that goes for every aspect of personal finance so is there something that you need to break up with is there a piece of traditional advice rule boundary that has never felt aligned with you then you need to break up with it and replace it with something else.

12:23That will afford you the ability to move ahead,

12:28Sarah:the ability to make the changes and be powerful within your own money. All right. I know this was a different type of episode than I normally do, but I thought, you know what? I'm going to share this. I think it's really key to hear the smaller aspects of the journey and how I navigated those, how they supported me. So I shared, you know, redefining what emergency fund means to you. And honestly, if you are in the tech world, I know there's other, you know, careers that afford that are very similar, do be prepared for job loss. However, here's a little quick piece of information. if you save for your home, your auto, your medical, or whatever you decide are emergencies like that, in the off chance that you are in a job loss, those monies will support it.

13:30Sarah:Those monies will help guide you through. It's still an emergency and you still have money. As long as you have a bundle of money, a stash of money, whatever you want to call it, and something happens that needs more money, look there first. This is how it offsets our use of a credit card, our use of a HELOC or anything personal loan is if we have that bundle of money. So I hope this was helpful. I hope it helped you realize how you can navigate through some of your challenges, some of your hangups that you might be having. Getting clear on that is very important. So I hope that was very helpful.

14:20Sarah:Again, reminder about the workshop. If that would be helpful to help you kind of resolve down to all of the efforts you've put in till now. We're in the middle of our money journey and you need to know how to complete it easily. I hope you'll attend. We look at those numbers. We add up one, two, and three, and then we define where you need to give your focus first. So I hope you'll join me. Thank you for listening this episode until next week. Thanks for tuning in. I hope today's episode helped you feel a little clearer and more confident about your money and reminded you that progress doesn't have to feel overwhelming.

15:01If this episode was helpful, I'd love it if you followed the show, left a quick review, or shared it with another Gen Xer who could use this kind of support. And if you're ready to stop guessing and want clarity around what to focus on next, I invite you to book a free financial clarity call at elevatefinances.us backslash clarity. And remember, retirement isn't just a dream, it's a plan. Let's make it possible together.