Is There Such A Thing As An Emergency?

Financial writers (myself included) often talk about the “emergency fund.” This is money you set aside so that you can pay for things like medical expenses, car repairs, home repairs, or some other sudden, necessary expense. Having extra money set aside means (ideally) that you don’t have to pull out the credit card to pay for these expenses.

But is there really such a thing as an “emergency” when it comes to financial matters? I’m not so sure there is. My dictionary defines “Emergency” as: “A serious, unexpected, and often dangerous situation requiring immediate action.” “Unexpected” is the word that hangs me up. Most of the things that we encourage people to save up for are not unexpected. They may happen at an inconvenient time or on a day you wish they wouldn’t, but most, if not all, financial emergencies are expected and can be prepared for.

I think that when we call them “emergencies” we’re letting people off the hook. It’s like saying, “It’s okay that you had to go into debt for that because it was an emergency. How could you have known?” The thing is, you can know and you can prepare. You may not know the exact date or time that the problem will occur, but you can be sure that a car will break down or wear out, that a storm may damage your house, that you might get sick, or you might die. You can know these things because they happen in life. You hope they don’t, but they do. Sooner or later these problems happen to everyone because it’s just the nature of life. Here are some examples:

Car Problems / New Car

Cars, by their very nature, are breakable. They either wear out or get into accidents. You know that at some point you’re going to need a car repair or a new one, so you should always be saving for the repair/replacement. The death of a car should never be considered “unexpected.”

Medical Expenses

You may not know exactly what will go wrong with your body, but human bodies are breakable and prone to illness. Something is likely to happen to all of us at one point or another. We may get into an accident, fall down the stairs, catch a disease, or get cancer. At the very least (and if we’re lucky) we will get old and there will be health problems that come along with that. You should always be putting money aside to cover the health issues that you will surely face.

Death

It happens to everyone. You may not think that you, your spouse, or your kids will die tomorrow, but it’s possible. You should have life insurance, a will, and be prepared to deal with the financial aspects of death. No want wants to think about death, but it’s a fact of life and not “unexpected.” As they say, no one gets out alive.

Appliance Breakdown

Like cars, appliances will break and need repair or replacement. And you can be pretty sure that it will happen at the last convenient time. You should always be saving for replacements and repairs.

Natural Disaster

If your house is leveled by a tornado or a hurricane and you live in areas prone to those events, it’s not unexpected. You have to know what sort of weather your area receives and prepare for natural disasters accordingly with insurance and savings.

What you have to do is stop thinking of everything as an emergency and instead start thinking of it as something that you can prepare for. That puts the control back on your side. You can save money, get good insurance, keep your disaster kit handy, and take what steps you can to protect your health and property. If something unfortunate happens you’ll be prepared, not running around in a stressed, emergency state of mind.

What you’re really setting money aside for in your “emergency fund” are expenses that come up at unknown times. You know you’re going to need a new car, but you don’t know if you’ll need it tomorrow (because of an accident) or three years from now (because it wears out). You know your home will need a new roof, but you don’t know if it will be because of the storm that hits next week or because it wears out after twenty years of use. You know you’ll probably have some sort of medical issue but you don’t know if it will be because you fall down the stairs next week and break your arm or because you get into a car accident two years from now. Or, because you simply get old and need care.

The point is that, while you cannot know the exact date and time that financial events will occur, you can know that they may happen at any time and you can prepare and save accordingly. You can set money aside, insure yourself properly, keep disaster kits on hand, and have a plan in place to deal with these things. Instead of feeling out of control and at the mercy of emergencies, you can plan, prepare, and face life confidently.

(Photo courtesy of davidsonscott15)