When the Money Itself Becomes a Priority, Watch Out

The following post is adapted from YNAB Podcast, episode 247 (listen on SoundCloud and Spotify).

So, what happens when you’ve dutifully saved your dollars to pad your emergency fund (or replace your aging roof, or make an upcoming car repair), but then something happens that requires you to spend that money elsewhere?

The answer to this one can get pretty dicey, especially when you’re dealing with emergency money. Your emergency fund is there to cover the unexpected—that’s it’s job. But, as you use YNAB more and more, you don’t experience as many emergencies. Because of your diligent budgeting, you’ve set aside money for your true expenses, and your ability to predict your spending needs increases exponentially. Of course, nobody is immune to Murphy’s Law, it’s just that crises are much more rare.

… so your pile of emergency cash is just sitting there in the bank, just waiting around in case you need it. Then, one day, you do! Maybe a pipe bursts, you’ve got a huge leak and it’s going to cost $3,000 to get it fixed. What are you going to do about it?

You’ve got $15,000 in your emergency fund, but it’s tempting for some of us to be tightfisted. You might think, “If we cut here, here, here and here … scrimp, save … and cut back on everything else, then we can pay this thing off without needing to dip into the emergency fund.”

Having that $15,000 balance has become sort of sacred. It’s money that you don’t really want to touch. You’re proud of it, and you’re proud that you never need to use it.

This is where you need to be careful.

It’s rewarding, at times, to play little games with yourself—to see how far you can stretch your dollars—but you don’t want to attach guilt to using money for its intended purpose! You already gave your emergency fund money the job to take care of emergencies, so let it. It might feel good to see that big balance sitting there in the bank, but stick with your budget—your plan—to use that money for emergencies.

In other words, let your money do its job by fulfilling your original priority.

Let’s look at another example. Say that you’ve, very intentionally, set aside $3,000 over the course of a couple of years for a massive vacation, but suddenly decide that having the money is the priority (and I’m not talking about following Rule Three, where you realize your core priorities change). Think about that for a moment: Having the money has taken priority over your original intention, which was to go on the vacation, make memories and live life! Would you do that?!

So, back to your broken pipe. You set aside $15,000 so that you’re able to pay for emergencies—it wasn’t to simply have money. If the priority was to simply have a lot of cash, to grow your balance as high as possible, it’s going to be really tough to feel satisfied over the long-term.

This is just a warning …

Just be aware that sometimes the category balance in your budget can sometimes start to feel like it’s the actual priority for your money. It’s not. Remember what you intended for your dollars to do, right out of the gate, from the outset, and when you were thinking clearly (and weren’t confused because you suddenly are sitting around piles of money). Such is the way of a YNABer. Such is the life and the burden you bear.