Emergency Funds

Why do you need an emergency fund? How much should you have in your emergency fund? Where should you keep your emergency fund? Do emergencies really happen? Rainy day funds, are they the same thing?

Is dental work an emergency?

Today I'm calling it a rainy day fund. It didn't actually rain, but it sure put a damper on my day. I don't know many people who enjoy going to the dentist. It's a necessary part of life, especially if you have teeth. But what do you do when the dentist tells you that you have $2,000 worth of work that needs done? Do you freak out? Do you leave and hope the damage will repair itself? Do you get a second opinion? Do you wish you had dental insurance to help cover some of the cost? Do you calculate the cost of waiting until it gets worse before you handle it? These are all the things that crossed my mind during my extended stay in the dental chair today.

It got me thinking about our emergency fund, which is partly tied up in our HSA (Health Savings Account) since I'm willing to bet that at least some part of an emergency could be medical related. Is a broken tooth an emergency? In this situation, probably not, but it's also got a price tag that is bigger than our ability to cash flow it in one month.

The stages of grief are what I've experienced over the last couple weeks with regard to a tooth. A tooth that I have cared for most of my life. It started with denial. The filling didn't hold, I didn't immediately make an appointment, I wasn't in pain. Then came anger, I was angry that the filling only held up for about 6 months, knowing full well that the location of it was less than ideal. Bargaining, do I really need to get this looked at? Couldn't it wait a while longer? What's the worst that could happen? Depression came today as I was told I would be needing not one, but 2 crowns, side by side. Over the next three hours, I accepted my fate and jumped on board with the treatment plan.

One thing I didn't do was stress about the cost. We have money to cover these unexpected expenses. It's a lot of money. I would rather have saved it for another day. I would have rather purchased something else. And all these thoughts and emotions are completely normal to go through. And it's ok. That's why you have a rainy day fund. You don't know which day it's going to happen, only that it's going to happen. And when it's over, replenish the fund as quickly as you can. A Health Savings Account, a High Yield Savings Account, or a Brokerage/Money Market are all options for storing the fund. Remember that the HSA is only for eligible medical expenses. Fully funded emergency funds can be anywhere from 3-6 months of expenses. If you need help determining what size fund is right for you, schedule a chat with me https://calendly.com/smithfc1210/coffee-and-chat