The Unique Way I Set Money & Time Aside So I’m Always Prepared For The Worst

If you’re still deciding what to do with that tax refund this year, and you’ve already read this and this, let me put in my two cents and firmly tell you what to do with it.

You should put it in an emergency fund without looking back. If you already have an emergency fund, you should not stop reading because you’ve read that advice 300 times already this tax-season, because I think you should start yet another one.

I’m a big believer in the emergency fund as an anti-anxiety tactic, and I’m an even bigger believer in having multiple e-funds for different things…so much so that I struggle with how much we hold in smaller separate pots instead of investing. Right now, that is the cost of some peace of mind, and because I’m anxious by nature, my spouse and I have five emergency funds:

1. A classic “what if we both lose our jobs” fund, which has also functioned as an “I have to leave this job before I lose my sanity” fund

2. A small “life happens”/car repair fund

3 & 4. Two separate small individual accounts…just in case (I need this fund as an antidote to “my parents divorced early and acrimoniously” and my partner’s is “my parents divorced after decades and acrimoniously.” Pragmatism isn’t outwardly romantic, but for us it’s about being able to choose to stay together because we’re both protected. Mostly we use this for secret-gift-buying, though!)

5. A “family-emergency” fund, which is made up of more than just funds

I live in a DC suburb, and TFD is based in New York, both of which are expensive cities full of transplanted people. So I think it’s relevant to factor in what it means, financially, to choose to live out of driving distance from your family. If you’re in college, this is likely a fairly short-term situation, and hopefully your basic emergency fund will cover you. With most regular family things like weddings and holidays, you can budget ahead of time, or schedule visits for every other year, but inevitably…the ugly part of life happens.

I know it can be especially touchy to talk about sickness or death and money in the same conversation, but I’m doing it because money issues don’t disappear just because you’re grieving. Last year was tough for my family: Three well-loved men passed away over the course of seven months (talk about being spooked to answer the phone for a while), and all of them lived out of town.

It wasn’t luck or credit cards that allowed me to make sure I made it to a family member’s last Thanksgiving that year, or be at all the memorial services. Even though I was lucky enough to get some financial help from family, and some understanding from work, it’s not something I want to rely on. (I’ve had painfully inflexible work situations before!) Here is how I prepared my family emergency fund:

  • I saved enough for a basic flight in a separate account, and covered the last-minute cost difference with my regular emergency fund.
  • I regularly buy and hoard gift cards (and register them!). If a gift card covers a quick airport breakfast or an Uber so a cousin doesn’t have to pick us up from the airport, I’ve lessened my burden, and freed up a bit more cash. I also like to keep gift cards for gas or groceries to use once I’m home again and on a tighter budget for the next few pay cycles. I haven’t bought airline gift cards before, but I plan to.
  • I always keep one vacation and sick day in the bank at work. Even when the destination is drivable for me, a nine-hour road trip each way basically means being awake for 24 hours straight, or taking two days off work just to travel, often unpaid. Knowing I have the time to take means I don’t stress as much about pissing off my boss to get to a Thursday funeral.

While I’m calling this a “family emergency” fund, I don’t want to exclude people without large extended families — what I mean to do is advocate for a second-tier savings account that is tailored to your non-material needs. For example, I have a friend whose family is mainly on the west coast, so her fund has to cover roundtrip across-the-country flights at the last minute.

Another friend has several pets, so she has a fund for unexpected vet bills. This fund is really about maintaining emotional health.

For me, I want to avoid being in a heartbreaking situation, like not seeing someone when they are still fairly well, not celebrating their life and supporting their kids or partners, or not being supported myself because I can’t afford it. I really don’t want to feel like I’m making a family member feel unloved, or jeopardize my relationship with them by implying that money is more important than they are. I’ve been in a few of those situations and seen others in them, and man, they seriously suck.

My family emergency fund prevented all of those scenarios for me this past year. One of the three memorials I went to last year was actually just after tax time, and it was that refund that sparked the idea of intentionally putting some of that money aside to be used for this purpose. And even though I have a basic amount of vacation days, it didn’t feel restrictive to start the year planning one fewer — just in case.

My last point in why I decided to officially create a dedicated fund to be able to attend emergency family events is the hardest, but was key for me:

I had to be realistic about life. People get old, and they die. People get sick when they’re young, too. This is part of life and growing up, and frankly, something that we’re too afraid to talk about (kind of like we are about money — we don’t talk about it until we’re forced to). It was hard to make myself face the fact that when a family member is in their late 80s, their death shouldn’t be a total surprise, even if it’s almost always still a bit of a shock. I’m okay with knowing death is a hard topic to grapple with, as long as it’s also something I can address and choose to plan for.

Mairead doesn’t get why everyone doesn’t want to talk about money with her! She works for a small non-profit in the DC metro area, wants an Irish Wolfhound, and drinks her coffee black and constantly.

Image via Unsplash

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  • bextannya

    You managed to make a common tip into a relatable, rational and practical tip. THANK you for speaking about what generally makes us Westerners uncomfortable, and by providing concrete examples as to how your multiple emergency funds are helping you/have helped you. Great article!

    • MH

      Thanks, Bex! It’s so nice to see some positivity on the internet! 🙂

  • LynnP2

    Great article! I currently have a short-term emergency fund (last minute flight, unexpected medical bill, etc) of about 1k, and am focused on building up my “lose my job and everything goes to s*** fund,” which I hope to never ever touch and just keep as an insurance policy. Once that one is where I want it to be, I want to break up my short-term emergency fund into a few specific things and build those up (for example, I want an emergency fund just for unexpected medical bills since those freak me out). Remembering to keep a few vacation days in store is also great advice. I am very lucky to get bereavement leave of 3 days when a relative passes, but when my grandmother passed a few weeks ago I ended up needing to take 4 days, and was glad I had the time. The gift cards is a really interesting idea I hadn’t thought of as an extra insurance policy! Don’t some of them expire/have fees if you don’t use them?

    • MH

      Thanks, Lynn! It sounds like you’re on a good track–and yeah, I think we all have a bit of a sore-spot for something like unexpected medical bills or family that is worth investing in just for sanity…and especially once you have that basic cushion under you already
      I’m pretty careful about gift cards after getting burned so I read the fine print and don’t buy certain ones (I’ve had issues with AMEX), but I also don’t tend to keep gift cards year over year very often–so when I can buy more, I use the old ones to subsidize other tight-money times like holidays or vacations. There are lots of easy ones if you’re nervous about that though. Amazon and PayPal both let you keep a gift card balance on your account which is very easy.

  • Christian Gonzales

    I’ve read several similar articles, but this one has so much reasoning and practicality and is just so relatable!!
    Finally seeing the sense in diversifying my savings. Thanks for writing!

  • T

    I am really happy I came across your article, since I am just rebuilding my emergency funds. I hove one I call “Fuck-off-fund” build up (similar to your number 1), now I need more money in the “medical emergencies” (which includes my pets, not just people in our household) and one for cases as “my computers stopped working and I am fucked” fund.

    • MH

      I’m so glad! and wow, I think about the computer one a lot–it’s the livelihood of so many people, you really HAVE to replace it asap.

  • Jack

    5 emergency funds?! You are my HERO.