Changes in Tactics After Accessing Our Emergency Fund

I enjoy investing as much of our money as possible into the stock market. It’s great to know that it’s working hard, typically growing at a rate 3x or more than inflation. However, for better or for worse we’ve been keeping money for short term expenses in high yield savings accounts. 

This wasn’t always the case though. 

I used to keep all of the money I had in my checking account. Investing in a high yield savings account, let alone the stock market, wasn’t even a thought that crossed my mind when I was starting out in my career. I spent years without investing and basically spending most everything I earned, and anything I had left was even losing out to inflation.

I think this is partly why even high yield savings or money market accounts bug me these days. I feel like I need to make up for that time that I wasn’t investing earlier in my career by putting all of our money in the market.

We currently don’t invest money in the stock market that is set aside for emergencies, upcoming maintenance, or other upcoming spending like travel or nice-to-have home improvements. However, over the last few years I’ve been starting to make an argument for investing at least a portion of this money in stocks rather than let it sit on accounts close to inflation.

The Emergency Fund

I have noticed that almost every personal finance resource I’ve read and listened to does recommend having an emergency fund. My wife is also very keen on having some money available in case something unexpected comes up. I don’t have an issue with this. I just like the idea that some or most of this money set aside is growing with the market.

Every now and then I do hear someone talking about or suggesting just using an invested brokerage account for an emergency fund. This has always appealed to me. Sure, it might take a little while to sell shares of a fund and into a checking account, but since most things are payable by credit card, it should be doable to obtain before the credit card bill comes due.

Upcoming Maintenance

Not only have we had uninvested money set aside in case of an emergency, but we also have house related projects that need to get done.

We’ve been lucky enough to be able to hold off for a bit, but to start off 2025, we were aware that it is unfortunately the end of life for the roof, the furnace, and it’s time to repaint the house. Also the fence needs replacing.

Rather than waiting to pay for these when we get to them, we’ve taken the approach of saving in advance so we have the money available when we need it.

I’m actually fine with this approach. Even though it seems that the cost of materials and labor rises faster than a high yield savings account, having it set aside helps us ensure that the funds are available when the work needs to get done.

Other Short Term Savings

Another category of money we set aside for savings is for travel and items that we don’t necessarily need, but are kind of nice to have. We have several potential house projects, we like to plan some small and some large family trips, and you never know when an opportunity will come up to take an adventure with family or friends. 

We are always checking in to make sure we schedule fun activities throughout the year. We know that we will only be getting older and that our kids are at great ages for vacations. Also, if there are ways to improve the house that will bring us more joy while we’re living there, then we might as well make those improvements sooner than later.

So, as surprising as it may seem, I actually like leaving this money easily available in savings. If the fun money is ready to use, we’re more likely to use it, and we don’t want to miss those opportunities. In fact, we want to encourage ourselves to take advantage of the time we have.

Using The Emergency Fund

We have been very fortunate throughout our marriage and with kids when it came to needing emergency funds. Yes, we have definitely been through difficult times, but when it comes to needing large amounts of money for unplanned repairs or replacements or medical needs, we haven’t had as many incidents as others we know. Our jobs have stayed stable.

This year was different.

We decided to go for the roof replacement, and were more than happy to use our saved up maintenance money for that task. Of course the bids were a bit higher than anticipated, but we had saved up enough and agreed to the amount.

Very shortly after the roof was redone and soon after getting back from travel with family, my wife called me over. “I think we have another leak”…

Yes, another leak. We had had two pinhole leaks in less than two years. Both of these were small and not too costly, but had required removal of some drywall and replacing small sections of pipe. Well, we thought it had been taken care of. Apparently it had not.

This time the diagnosis was different. Yes, this was another pinhole leak, but as they tore open more drywall, more small potential pinhole leaks looked to be forming, and they finally told us the bad news. If we didn’t want this to keep happening, they recommended that we replace all of our pipes. 

What? Replace all of our pipes? Wouldn’t they have to rip out more drywall around the whole house and replace piping to every single hot and cold line throughout our home? What a nightmare. Yes, they told us it was a hassle, but better to do it all at once than one small section at a time.

We did consider holding out and just replacing another section of pipe, but in the end decided to replace the pipes across the house. They did a great job, and we were able to get the walls patched up as well.

Having the money available to us right away made it so much easier to be able to make what we felt was the right decision.

Change In Thinking

I finally knew how I feel when we need to access a large amount of money from our emergency fund. I feel better having the money sitting in a savings account designated for use in these (hopefully) rare occasions, knowing exactly how much is there, and ready to access.

I definitely felt stressed at the time, but I knew exactly where to look for the funds and how to go about the process. I was ready.

If I needed to withdraw money from invested accounts taking several steps and trying to consider tax consequences and such, I think the stress level would have risen. There were also additional savings by paying with money on hand and not using a credit card.

Although we most definitely would have more money now if all of our funds were invested in stocks, I’m pretty sure we wouldn’t have taken as many adventures, we might have waited a little too long for some of our maintenance requests, and contrary to my feelings at the beginning of the year, I think we would have developed more stress and anxiety when it came to accessing our emergency funds.

I will now be happy to continue to keep emergency funds in savings, just like the Maintenance and Fun funds.

Reader Question

• Where do you hold money for your short term savings and emergency fund?

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