My stove broke. We had a technician out to check out the gas line, and he discovered an issue with our gas line and where it connects to our stove. Since we rent, the gas line is our landlord’s problem (thank goodness!), but the stove is ours, so we are on the hook for the actual stove expenses.
I’m pretty grateful that the gas problem was caught because it’s pretty scary to think that we may have used the stove without realizing there was a gas issue. For now, we can’t use the stove until it’s resolved, and we are not sure how much it will cost yet. A technician is supposed to come tomorrow. Meanwhile, we are stove-less.
Luckily we have an Emergency Fund!
This is what the emergency fund is for! This is pretty much the definition of an emergency: we can’t push this off (We need our stove to cook, especially since the High Holidays are coming up pretty quickly), we can’t skimp on the repairs, and we can’t DIY since the gas company will need a licensed and insured technician to sign off on the appropriate repairs.
Should I have Budgeted for this?
There has been discussion about the importance of an Emergency Fund. Someone on Twitter mentioned that these types of situations turn people off from having a fully-funded Emergency Fund as a goal. It’s better to have budgeted for this situation in the first place.
I beg to differ. The fact is, you can’t really budget for every eventuality. If we did have an appliance repair line item in our budget- we would have maxed it out a while ago as, for some reason, all our appliances are needing major repairs this year. I don’t really see the point in budgeting for so many different eventualities. The amount of money you are putting away is the same- the numbers don’t change just because you have more things to budget for.
You have a specific amount of money that needs to be divided up into your budget categories. That specific amount does not get bigger just because your budget items do. If you get bogged down with too many categories and line items and envelopes and funds- that is what gets you discouraged. How can you keep up with that? How can you even keep track?
Introducing the “Life Happens Fund”
You don’t need to call it an emergency fund. You can call it an “Inevitable Fund.” You can call it a “Life Happens” fund. You can call it the “All the Things I can’t Budget for because I Am Human” fund. The point is the same: it’s a fund for things that come up unexpectedly.
How We Do It
Currently, we have two “Emergency Funds.” One is the ,000 Emergency Fund which I think from now on I am officially renaming the “Life Happens Fund.” We picked that number because Dave Ramsey suggests it, and it seemed like a good idea. That fund is in a CapitalOne 360 Savings account. If we can, we put the “life-happening” on a credit card and then pay it off (thereby getting some points as well!), but we also can withdraw the money in cash if we need it. Many technicians offer a discount if you pay in cash, so it’s nice to have that option.
Our other “Emergency Fund” is what we are still building. This will hopefully have 6 months of living expenses in it. This is in a high-yield savings account (Barclays) and is growing awfully slowly.
The reason for the incredibly slow progress is because every time we have to use our “Life Happens Fund,” we stop funding the “Emergency Fund” and put our money towards our “Life Happens Fund” until it is again at $1,000. Then we resume putting money into our “Emergency Fund.” It is definitely a one-step forward, two steps back type of situation. But at least there is movement!
Simplify. Simplify. Simplify.
How do you Budget for Unexpected Expenses?
By creating a “Life Happens” Fund you can save money for all those things you didn’t budget for.
Over complicating budgeting, savings, and finances are not really in your best interest unless these types of things fascinate and excite you. Simplification is the key to consistency and successful results.
This goes double if you have joint lives or finances with someone else. Chances are, even if you are endlessly fascinated by budgets and line items, the other person in your life is probably not (and if you both are, then this blog is probably not for you). Simplifying, reducing, and combining as much of your budgeting and finances into simple, manageable pieces will go a long way to having a successful budget and a clear way to financial security.
Good thing we have a Life Happens Fund- our stove saga continued with some good and some bad news.
Robyn Goldfarb
Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.
I love the concept of calling it a “life happens” fund instead of an emergency fund! My 3-6 month fund is actually called the “In Case of Unemployment” per my bank…but I’m hoping I’ll never actually need to use it.
Hopefully you never will! Naming things give them a purpose. Once you have a purpose its easier to work towards it.
I agree with you to keep it simple! When I have too many choices, or things get complicated, it becomes overwhelming. Why make money more stressful than it needs to be?
So glad you found out about this problem before your health was endangered!
I’m so incredibly grateful!
My philosophy is that personal finance does not need to be complicated. Our lives are complicated enough as it is! Simplify. Simplify. Simplify.
Thanks for sharing!
Personally, I keep an emergency fund more a “loss of employment” or larger expense / disaster (fingers crossed it never happens). Then I just cover “life happens” moments on a credit card to give me more time to save up and pay it off without having to dip into investments. When you’re not living paycheck to paycheck, it can be a good way to keep more of your money invested and working for you.
A “Life happens” Fund, I love it. Too many people get hung up on the terminology, as you say, it’s the same thing but I like that name and may well steal it. Sounds better than an Emergency Fund doesn’t it lol.
Hopefully you won’t have too many emergencies but life definitely does happen and its so important to have a buffer!
I really appreciate this idea. As someone who has consistently seen their emergency fund eaten by their house, I need to find a better name for it so I don’t start to… resent my house!!!
I agree that simplification is what helps us organize our finances in our minds in a way that is more motivating and makes more sense. Words and terminology matter.
Pinned!
I love the name change to “life happens fund”!
For the emergency fund, did you consider putting that into an investment rather than savings account?
I like putting it into a savings account- preferably a high-yield one. Investment accounts are for money you don’t need right away. Savings accounts are just to hold money so you can use it when you need it. This is not financial advice.