This may seem like strong language to use when discussing savings but both Richard and I feel very passionate about the benefits of our emergency fund.  Having money set aside for a rainy day has truly changed the “depth and breadth and height”* of our life.  How, you ask?  Let me share our list.

1. Our day-to-day stress level is much lower with an e-fund in place. I was shocked when I saw how having an emergency fund in place turned down the volume of my worries about money. The week before payday used to be a time to fret as I nervously watched the mail for checks from clients and calculated what we could and could not buy at the grocery store. Now these weeks are no more stressful than the others. This alone is an incredible benefit!
2. Many individual situations are no longer stressful as well. Before we had money set aside, a “rainy day” was triggered by only a few sprinkles. Now we have an umbrella to keep us dry longer. This means new tires for our car are just new tires, not the beginning of a financial flood.
3. Our emergency fund helps me be a better parent. I’m sure there are parents who can put financial worries aside and turn their full attention to their child; I also know that I am not one of them. When I was worrying about paying each bills, I worried around the clock. Even when playing with my children, my mind was often working to figure out a solution so I was not always fully present. Now when I am with my kids, finances are not fighting for my attention.
4. We enjoy time with our children more. We find it easier to enjoy snuggling up with our kids when that overwhelming feeling of, “What are we going to do?” is not pushing for a seat on the couch. See also points 1, 2, and 3.
5. Cash flow has some help remaining fluid. I’ve mentioned the importance of cash flow in other articles (Four Lessons from Self-Employment). The issue is repeated because it is SO IMPORTANT. Interruptions in cash flow can destroy a business, even one that is chugging along on every other front. An emergency fund can bridge the gaps that can (and do) occur. A client’s accountant can have a family emergency, checks can get lost in the mail, and sometimes clients are having their own cash flow issues so aren’t paying on time. Whatever the case, knowing that you can play the waiting game without experiencing serious financial repercussions is a huge relief.
6. Money in the bank provides confidence. One unexpected but enormous benefit of the emergency fund is that it gives us confidence. Richard knows he can advocate for the right thing in his job, rather than solely being concerned about keeping a paycheck. I know I can turn down work if it is not a good fit, rather than thinking only of the bottom line. Richard and I have compared this to dating – when desperate, you don’t attract the attention you want. Confidence is very powerful. You’ll also feel great when you read financial checklists and can check off, “Build an emergency fund.” Knowing you did what you should do is an enormous boost.
7. Building an emergency fund models great values for your children. Saving money is hard, especially at the beginning. Talk with your family about what you are doing and why. One analogy that may help young children is discussing a first aid kit. You have band aids ready in case of an accident; you also need to prepare for other unexpected situations. Since children pay more attention to what you do than what you say, let them see you make decisions to save money and you’ll make a big impact on their financial future.
8. An emergency fund creates momentum. Studies have shown that self discipline in one area can increase your control in other areas. Since self employment requires lots of self discipline, getting your emergency fund in place can serve as a launching pad to your new life in more ways than one.

* To see the full text of this and other wonderful poems by Elizabeth Barrett Browning, visit http://www.online-literature.com/elizabeth-browning/.

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