How Your Emergency Fund Can Become Your Opportunity Fund

By: Kira Bushman / May 10, 2019

I’ve never really considered myself an optimist or a pessimist. Actually, I’m a little bit of both. I like to live in that healthy place somewhere between being a doomsday prepper and singing in the rain.

When it comes to saving, I try to have a similar attitude. But so much of what we hear about saving is more on the doomsday prepper side of things: what will happen if you get hurt? What if your car breaks down? What if you get fired? What if you get hurt and your car breaks down and you get fired? All of these what-ifs are usually thrown at you by a well-meaning parent or friend who just wants to make sure you’ll be okay no matter what, but it can be a little depressing to think that you are only saving so your wallet will hurt a little less when your life inevitably goes down the drain.

That’s why it’s important that when you save for emergencies, you think of that account as being much more than an emergency fund. It’s an opportunity fund, as well, which means it will take care of all the positive what-ifs: what if you need to pay to go to a conference that will give you some amazing networking opportunities? What if you get invited to interview at your dream company and you need to buy an expensive plane ticket? What if you get a new job and need money to move? What if you go to a conference and get invited to interview at your dream company and you get the job so you need to get packing?

Thinking about your emergency fund this way makes saving a lot easier and gives you a healthy dose of financial optimism. Once you build up your emergency/opportunity savings you’ll really be ready for whatever life throws at you. Being prepared for the unknown gives you the confidence you need to push forward in your life and your career, without being terrified of what could happen to your money.

Why You Need an Emergency Fund

We Millennials aren’t very good at saving. I doubt that comes as much of a surprise to you. I mean, if something happened to you right now and you needed $1,000 to cover an emergency expense, could you do it? Only 40% of our Millennial peers can. If you’re not part of that 40%, it’s time to start building up that savings account.

The important thing to remember about saving is that it isn’t a privilege. It’s a necessity. If you are living paycheck-to-paycheck now, not being prepared for a future emergency can put you in debt and worsen your financial situation even more. Even putting away just a few dollars aside here and there can make a difference. And once you build that habit, saving will become easier.

You might wonder what kind of emergencies you will need to prepare for. The thing is, it doesn’t really matter if you are lucky enough to be young and healthy. Put yourself in a loved one’s shoes for a second and go through all of those what-ifs they usually throw at you. Think about how expensive those situations would be. It’s not hard to see why they’re worried!

Now, you could brush it off and say you will put it on a credit card or borrow cash from a friend. People do that all the time. But when the time comes, will you feel good about those options? Probably not. You’re a strong, independent woman. Give your savings account a little love so you can start acting like it.

How Much You Should Save

Instead of thinking you should save as much as possible, it’s actually better to strive for a happy medium. The general rule for an emergency savings fund is to save 3-6 months worth of expenses in an easily accessible account. This doesn’t mean bare minimum expenses; it means all of the real-life expenses you have now, including things like shopping and entertainment. This way, if something drastic happens and you lose your job, you have the option to keep living like you’re living for a few months.

The 3-6 months rule is flexible and means something different for everyone. For example, it may be more important to someone with a family to include extra entertainment expenses so their kids would be able to live the same way they were living before. A single woman who’s more able to cut back might not feel the need to save for those things.

Additionally, you need to think about how quickly you could find another job if you were let go from the one you have now. Is there a lot of opportunity for you in your area? Or would finding a new employer be a slow and painful process? You may need to save more or less depending on the answer.

Finally, it’s important to think about finding that happy medium. Having 6 months to 1 year of emergency savings is great, but anything over that is excessive. When you put away more than that, you are missing out on opportunities to save for retirement, invest, or simply live a little better.

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Turning an Emergency Fund into an Opportunity Fund

After graduating college in Indiana and moving all the way down to Florida, my emergency savings account was looking a little bit drained. Much of what I had saved up from college was meager at best, and it wasn’t long before much of my graduation gifts were spent on furniture and home goods for our new place.

When I started my new job, one of my most important goals was rebuilding my savings account. Every time I got a paycheck, I would go on my bank’s app and move some of it into savings. The more immediately I transferred the money, the less likely I was to miss it (or accidentally spend it). At the end of the month, if I had a little leftover, I would put that in my savings, too.

It wasn’t too long until I was back where I needed to be. If I lost my job, I would be okay for around three months if I didn’t change any of my spending habits. It was really comforting to know that, especially since I worked for a tech startup that seemed to have an uncertain future.

At my next job, I started to look at my emergency fund a little differently. I was struggling to fit in in my workplace, and though I enjoyed working in social media and design, I wanted to give my writing some attention. I was terrified of quitting and not having a job, but every day I spent at a job that wasn’t for me made that option seem that much more attractive.

I thought about how long it would take me to find a new job. Tech companies in South Florida are on the rise, and they need creative people more than ever. I had a couple of years of experience behind me and was even willing to take a pay cut if it was a position I liked more. I figured I could find something pretty fast. Still, I gritted my teeth and stuck it out while applying to as many jobs as I could.

When I decided enough was enough and I needed to move on, I did so knowing that I had enough money to sustain myself until I found a new position. I quit my job before I had another offer, which went against what just about everyone in my family was telling me. When I was talking to my dad about it right before I quit, I told him, “Look, I know you’re worried about me. But I know I can find a new job in a few months. I have enough money to sustain me until then. At any other time in my life, I may not be able to do something like this - but I can now.”

He was quiet for a second. Then he said, “You know, Kira, that makes sense. And I trust you. Do what you need to do.”

So I did. But I trusted what I had saved, and I went for it. I started a new job within two weeks, and my “opportunity fund” sustained me until then. At the start of your career, you need to be prepared for emergencies. But you also need to be prepared to take the opportunities that are out there for you. Save for the former, but don’t let the latter get away.

Kira Bushman is known on Instagram as @busy_witch for being both very busy and kinda witchy. When she's not working as a copywriter, studying for her MBA, or writing for fashion & finance blog called Style to Spare, you can probably find her somewhere in South Florida in holographic roller skates listening to disco music.