Delete Your Emergency Fund

The YNAB Podcast

YNAB

Consolidation, Total, Budget, Dave, Peace, Money, A, Education, Ynab, Finance, Bankruptcy, Makeover, Fpu, Software, Management, Personal, Need, Ramsey, Financial, University, Debt, Kids & Family, You

4.7 • 1.1K Ratings

🗓️ 17 April 2025

⏱️ 6 minutes

🔗️ Recording | iTunes | RSS

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Summary

On the surface, emergency funds sound like a very prudent idea. You set aside cash for unknowable, unforseeable events so that you aren't strapped when you really need it. We're not disagreeing with the idea, but an emergency fund is somewhat counter to the core principle of YNAB: giving every dollar a job. In an emergency fund, dollars are given a job, but it's a vague one.

Jesse likens it to a football coach yelling at his defense to "just stop the other team from scoring!" The coach is identifying the basic goal of the game, but there's nothing specific to help the players actually accomplish that task. A good coach instead instructs players what to do at an individual level, adjusting their positioning, technique, key reads etc. so that they can more effectively play their role on the team. The net result is the same -- stopping the other team from scoring -- but the results are far more effective.

The same is true with your dollars. While yes, we do want to set aside money for larger, less frequent expenses, the truth is many of these expenses are knowable, we just don't plan for them. New roof, new tires, plumbing repair, etc. Including these items into your plan and saving for them accomplishes what the emergency fund accomplishes, but with more clarity.

So, consider just deleting your emergency fund. Or at least make it smaller, and give those dollars more specific, effective jobs.

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Transcript

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0:00.0	Hello, my name is Jesse Meekam with another episode of the Jesse Meekam show,
0:16.8	and I'm here each week to obsess out loud about spending purposefully, saving aspirationally,
0:21.2	and giving joyfully.
0:22.7	It all comes down to just merely only giving every dollar a job.
0:29.3	I have a little challenge for you.
0:31.2	If you have a big, fat, plump emergency fund, my challenge to you is to delete it or at least maybe give it a little
0:43.1	haircut.
0:45.2	That savings that you have there, we call it savings a lot of the time and people will say,
0:49.4	well, that money is there.
0:50.5	I've got it saved up and it's for an emergency.
0:56.4	And then when an emergency happens this weird thing also happens to us psychologically where we feel sad that we are now using
1:03.1	our emergency for this emergency because we just that's for an emergency and how could we and it's a
1:09.6	weird thing because you tell yourself it's for an emergency,
1:12.1	and then when an emergency pops up, you don't feel that great about it.
1:15.4	And I have two theories.
1:16.9	One is what you've experienced isn't actually an emergency,
1:20.4	but you're calling at that and justify and pulling from the emergency fund.
1:24.0	And the other thing is you just like the big pile of money and no harm there but we have to
1:29.5	recognize that savings is just spending money that isn't spent yet so when your grandpa's like hey
1:37.9	here's some spending money you wouldn't be like ooh this is my savings but you might say ooh
1:42.9	i'm going to save this for a little bit added to my
1:45.1	other spending money save up and then buy the thing did your grandpa give you savings he said
	...

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