When Clouds Gather – Preparing for Emergencies

If you’ve spent much time on this site or asked me any questions about handling money you know that I always go back to the Financial Blueprint. It’s such a powerful framework to help you make smart decisions with your priorities. Well there’s one time when you should take a step back from whatever blueprint step you’re working on and focus on something else – when there’s trouble on the horizon.

If you spot trouble (or potential trouble) on the horizon it’s time to shift your focus a bit. The new highest priority becomes bulking up your emergency fund. If you’re paying off debt in Step 2 then go back to minimum payments. If you’re saving for retirement or kids college then cut it off. Even if you’ve already passed Step 3 and you’ve got a fully funded emergency fund, go ahead and build it up more. Whatever you’re working on, hit the pause button and pile up as much savings as you can until the skies are clear.

For example, in May I decided to leave my job running the operations for a web startup. It was a great job at an awesome company, but it wasn’t a good fit for my life anymore so it was time to move on. I had about 8 weeks leading up to my final day so we could see potential trouble on the horizon. What if I couldn’t get another job immediately? What would it be like without my paycheck coming in every month? Our priorities had changed (at least temporarily).

Our focus for those 8 weeks was on piling up cash because storm clouds were building on the horizon. Now I certainly won’t say it was easy, but we knew it was the smart thing to do. We had planned to vacation in Mexico in August, but suddenly that didn’t fit in with our new priorities. There were home improvement projects we were excited about that had to be postponed indefinitely. It was difficult to put these things off when we had plenty of cash saved!

My final day rolled around and I still didn’t have a new job lined up. I can’t say it was an awesome feeling, but it did feel good that we were prepared for this possibility and it allowed us to relax and make better decisions. I remember the horrific, shocked looks people gave me when I told them I left my job and didn’t have another one lined up yet. In retrospect we’re so thankful we didn’t go to Mexico. We’re thankful we didn’t get a new TV or repaint the upstairs. Because who would’ve thought we’d wind up here five months later?

Long story short, I decided to take some time working full-time on Bedrock Coaching and I’m loving it. Things would be a whole lot different right now if it we hadn’t prepared for this possibility. We may have missed a beach getaway and our guests are still sleeping on an air mattress, but our lives are stable in the midst of uncertainty. Our marriage has grown stronger during this time instead of suffered cracks from stress.

When you see storm clouds on the horizon it’s time to get to work building shelter. If the storm never comes then just take that extra cash and throw it at whatever blueprint step you’re working on. And if it does start pouring then being prepared could make all the difference in the world.

(Photo Credit)

Related posts:

1. Emergency Fund in Action!