We have all heard about saving for a rainy day, or an emergency. I think in most cases what we envision as an emergency is our car breaking down, or maybe getting in a small fender bender. But what would you do if these financial emergencies involved an extended job loss or having to come up with bail money for a loved one?
In the first example today, the family actually had enough money reserves to carry them through a few months of living on one income. But then the second earner also lost her job and it’s remained that way for the last 8 months. What do you do when your hope of finding a job within a couple of months turns into almost a year?
Or what would you do, if you get a call one afternoon from a loved one (parent, sibling, you name it) to tell you that they need your help in coming up with money to bail them out of jail? What if you can’t come up with the thousands of dollars involved? and have to live with seeing your loved one spend night after night in a jail cell while you struggle to raise the money needed?
These are, of course, real life examples I learned about this weekend and have had me thinking the following ever since I learned about them:
1) We live a very sheltered life, thinking that bad things happen to bad people, but not “us”. Most likely our ideas of “life emergencies” don’t involve this degree of financial disaster. And we also think that the chances of something like this happening to us are small . I don’t think these people thought chances were very likely for them either, but it happened to them.
2) What would it take for an emergency to become a disaster? What is your threshold? Is coming up with $50K in bail money more of a disaster than coming up with $5K to replace your furnace in the middle of the winter for two different individuals? In short, the answer is no. How disastrous the situation is depends on how much each individual planned ahead for something like this.
Ultimately, I don’t think we can ever be prepared for everything, mostly because financial resources are limited and need to be prioritized. However, we must remember that the main reason we save for a “rainy day” or have an emergency fund is that we want to protect the quality of living we currently possess.