The Fallacy of the Emergency Fund

When it comes to giving until it hurts, most people have a very low threshold of pain. I understand this saying  firsthand. Finances have been a topic of discussion around my home this summer for a variety of reasons, some good, some not so good. But whenever man evaluates his money, his true self seems to come through. And my true self could use some work.

We have all heard the advice: you should have “x” number of months expenses set aside in case of an emergency. Just how many months depends on who you listen to, but the net effect is the same. Experts tell you to keep thousands of dollars in the bank,  just in case.

While I have always struggled to follow this advice, I bought the premise. After all, it makes sense. If the roof suddenly starts to leak, or the water heater blows, it would be nice to have money already saved up for this. But let’s be honest with ourselves, if we can afford to keep 4 months worth of salary sitting in the bank, we can probably figure out how to pay for a new muffler on the car if disaster strikes.

The virtue of Justice requires us to be good stewards of our money.

While intellectually this makes sense to me, I have always struggled to really make this part of my financial life. What exactly does being a good steward mean? I give money to church, support a couple charities I believe in. Does that mean I am being just with my money, or does stewardship require more?

Here is where that emergency fund comes into play. What exactly is an emergency? And does the emergency have to affect me directly in order for me to spring to action?  As a freelance writer who depends on a laptop for part of my income, a suddenly dead computer would fall into the category of emergency. Or does it?

One way or another I would get it fixed or replaced. I might have to finance it, or carry some debt on the credit card, but my family would eat every day and we’d have comfortable beds to sleep in each night. Not to mention cable TV, cell phones, a reliable car, health care and of course each other.

So if replacing a $1,000. computer isn’t really an emergency what is? Short of an utter disaster, which  is what we have insurance for, I have a hard time thinking of an honest-to-goodness emergency. However, if I expand my sphere of influence a bit I can find them everywhere.

The recent crisis in Africa springs immediately to mind. My wife came across a news report of a mother literally waiting for her son to die in her arms at the same time we were bemoaning the fact that our dream budget needed to be amended for the last 4 months of the year. She likes to call these moment like these a “God Smack.” In this instance, I have to agree with her.  
Kids dying in their parents arms is an emergency. My really wanting a new car is not.

I am a big fan of author and theologian C.S. Lewis. He speaks of our need to follow the virtue of justice when it comes to charity with better eloquence  than I can.

I do not believe one can settle how much we ought to give. I am afraid the only safe rule is to give more than we can spare. In other words, if our expenditure on comforts, luxuries, amusements, etc., is up to the standard common among those with the same income as our own, we are probably giving away too little. If our charities do not at all pinch or hamper us, I should say they are too small. There ought to be things we should like to do and cannot do because our charitable expenditures excludes them.

This, I think, is what being a just steward with your money means. This is hard. Here is where the rubber meets the road. If I am truly going to try and live my life according to the classical virtues then I need to do it not only when it is easy and feels good. But I also must push through and do it when it is hard and feels, well, not necessarily bad, but, uncomfortable.

So in the end we reworked that family budget and cut out some more fat. Our bills will get paid. But in the process we also found a way to more than double our charitable giving. No surprise where that first check went.

“All you have shall some day be given: Therefore give now, that the season of giving may be yours and not your inheritors’.” — Kahlil Gibran