What’s the first thing you picture when you hear people talking about savings accounts? What about when you read about emergency funds?
If I’m being totally honest, I often see little snippets of Lord of the Rings in my head. You know that little balding goblin-y fellow (hobbit?) that clutches the precious ring?
Though, I’ve clearly never seen the movies, I do know my way around a GIF or two.
That’s precisely how I think we talk about savings accounts and emergency funds in the personal finance world. We cannot let those dollars out of our clutches for any reason.
And it makes sense.
Savings is ridiculously hard. Finance isn’t easy, and it’s never just about math.
Plus, there’s been enough conversation lately to know that for may people, a fully-funded emergency fund is going to feel like a lifetime. In fact, research shows that saving one month’s worth of expenses will take most Americans two years.
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But I do think that savings is meant to be spent. Now, this isn’t the post where I tell you that I’ve given into an indulgence and am going to start frittering money away again. In fact, I took time this weekend to officially unsubscribe from Kate Spade’s email list, and I emptied my shoe cart TWICE from the sandal sale at DSW.
What I am going to tell you is that–at this very moment–it is 82 degrees in the lower level of our house and my jaw is throbbing. In addition to feeling wildly uncomfortable and altogether grouchy, I also feel poor. The sweat beading on my upper lip feels like little dollar signs. The fact that I am constantly aware of the teeth in my mouth feels like I am chewing on money.
But here’s the truth: I’m not poor.
I’m going to face two very expensive bills in the next few days, but I am not poor.
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The problem stems from the fact that, too often, discussions of savings rates and growth and progress are linear. Sprinkle in the secret sauce of sweat, give your bootstraps a tug, and bada-bing, bada-boom. Financial success.
The truth is we are all playing a game of Chutes and Ladders. We like to think we’re climbing up and up and up, but we’re all a lot closer to the chutes than we recognize. 2020 has made that crystalline.
Our savings is going to drop. Whether we attempt to cash flow these expenses, pull it from our savings account, or both, I am going to have less money this week than last week. If I tracked my net worth, my guess is it would drop to the tune of a few thousand dollars. Collectively as a money world and individual as a party of one, we and I have decided to make that feel catastrophic.
If it’s not catastrophic, it’s at least unpleasant.
It’s icky.
It should be avoided.
But what if that’s actually entirely the point?
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We have savings, and it’s OK to spend it. I just confessed that we could pull the trigger on our mortgage but won’t for precisely this reason. I had no way of knowing that our HVAC would start puffing air with the lung capacity of a bumble bee bat in midst of a string of 90-degree days (Don’t worry, I live in the Midwest. It is most assuredly NOT a dry heat.). I also didn’t know that I would either grind my tooth to oblivion during a global pandemic–or encounter some other soon-to-be-diagnosed tooth trouble.
But I knew something would happen, which is why I saved.
What if this quest for financial freedom that we are on isn’t just about the destination? What if I’m not just growing my income, reducing my expenses, and saving and investing the difference to make my future self happy?
The future is no better than the present. The person that I am set to become in 5, 10, or 20 years isn’t more deserving of happiness, health, or air conditioning than present me.
There’s a time and a place to sacrifice, and there’s a time and a place to spend.
Sacrificing when your energy is zapped, morale is low, and patience is non-existence isn’t some exercise in stoicism. It’s punishment, and it’s a reason to quit.
I’m proud of myself, and I’m proud of my husband. We had some privilege and some luck. We also worked really freaking hard to make this savings happen.
Rather than allowing myself to wallow in scarcity, what if I decide savor the fact that I’m in a position where I can bail myself out? If learning that you can count on yourself isn’t a reason to celebrate, I don’t know what is. We spend so much time celebrating the act of savings, that we forget to acknowledge what that savings affords us.
So Tell Me..Are you good about spending your savings when there’s a need?
Oh Penny! I’m so sorry to hear about your teeth. I hope the procedure is neither painful or overly expensive and you’re back to normal quickly in a nice, cool house! Let us know how it goes!
Thanks for always being so kind! Appreciate your comment and appreciate YOU!
About $9K of my debt was HVAC replacement. If you can do that from savings, you should absolutely be celebrating!
Also, feel better soon!
Fortunately, we shouldn’t have to replace the whole unit yet. We do know, however, that we are on borrowed time. Ours is original to the house (like most everything when we bought it), and the previous owners are definitely more suited for renting! That is to say, they did no upkeep and MacGuyvered a lot of things (a garbage disposal sealed with putty!).
I get my bill tomorrow once the repairs are finalized!
Once upon a time, three years ago, I spent 5% of our annual combined family income to get my wisdom teeth removed. We had put a similar amount of money into car repairs a month or two earlier.
We literally saved money, so we would not have to worry about expenses like those, but it did not feel good to see that money leave our account. When you have a few kids, a house, and older cars, it’s easy to have $1k, $2k or $3k expenses just pop up out of nowhere. And when you have a lower income (even a lower middle income), it feels so disheartening to know that your luck needs to hold a few more months to build the savings back up.
These days, our income is higher, and it does not hurt to spend the savings. Whether it’s tax bills, medical bills, or car bills we can handle it and build back our savings pretty quickly.
Yes! So much of this perspective is because we earn more now. I remember when we had to have $600 worth of work done to our furnace. My husband was a first year teacher, and I think I was a third? It was a very different feeling than now!
Please get the tooth looked at asap! Tooth infections hurt like blazes and can lead to even more serious health issues. Those of us who read your posts kinda like having you around. And yes, I think that people who have learned frugality do have trouble spending money on things when they shouldn’t worry about it. Good habits are hard to break. But it is a good feeling when Murphy shows up at your front door and you don’t have to borrow money to send him away! Household repairs and dental work are both a little unrewarding because after you fix the problem it’s not like you are better off than before, you really are back where you were before the problem showed up.
You made my day! Thank you very much. I’m on the waiting list to get an earlier dentist appointment. Luckily, I had one for July anyway. I love that thinking, too. I had the money to send Murphy packing! 😀
I cash flowed most of my big home expenses for the past four years (and HVAC replacement was one of them) because I was renting out the spare bedroom at least 10 months out of the year. I won’t be doing that any time soon considering the current situation, so if something major fails I will definitely have to pull the funds out of my EF. I mentally cringe at the thought, but that’s what it’s there for.
It is hard to flip that switch mentally. It’s literally the entire purpose! I’m glad you were able to cash flow so much, too!
I hope you come home with a night guard to help with that grinding! I had to get one last year for similar sounding issues. I have trouble with it though, I can’t comfortably close my mouth at night wearing it. Still better than losing the teeth but ick anyway.
You can definitely track where I have been in life with my answers to this question over time. My emergency savings are still in perpetual lockdown against the big three (Job loss, tenant loss, and illness) because there are more of us to take care of than there are to earn money but I actually now recognize that when we need things, it’s ok to spend on them. And that wanting things to be neat and comfortable can be as important as a basic life need, within reason.
I hope everything turns out OK with your teeth (and the HVAC).
I was not so good about seeing our savings decline rapidly as we prepared for stay at home orders. My husband had to remind me that this was an emergency, and why we had the money saved.
I’m so glad he was able to remind you of those things. It’s definitely hard to see the number go down when you work so hard to make it go up!
I completely agree with you that spending your savings is not always a pleasure if it is unplanned and big expenses. But I have to say that your thesis: “We spend so much time celebrating the act of savings, that we forget to acknowledge what that savings affords us”, made my day. Good luck to you.
Thanks, Andre! We have a temporary fix for the AC now that only cost $175. We’ll see where things shakeout when the real repair happens this week!