We all know that we should save money. We know that saving and using cash for bigger purchases is better than using credit, sparing us from wasting many additional dollars on interest. We know that life’s curveballs can become somewhat less stressful when we have an emergency fund waiting in the bank. We know that it’s best to start planning for retirement young, so we’re financially prepared to stop working when our minds and bodies tell us it’s time.
We all know that we should save money. But we don’t.
A 2018 study from the Federal Reserve revealed that nearly 40% of Americans wouldn’t be able to easily cover an unexpected expense of $400. A January 2020 poll from Bankrate suggests that a similar number would need to borrow money to cover a $1,000 emergency, while also finding that the average cost of an emergency amongst respondents was around $3,500. Living without savings is the financial equivalent of playing with fire.
For many, this truth has recently become horrifically evident, as the financial effects of the coronavirus pandemic reverberate throughout the nation. Millions of people have suddenly found themselves unemployed, while thousands of others are grappling with unexpected medical costs and treatments. In April, 31% of renters did not pay their rent in the first week of the month, about 11% more than is typical.
This COVID-spurred downturn is, in many ways, my first time grappling with high levels of economic uncertainty. I was still a student during the Great Recession, and therefore shielded from many of its effects, but I entered the coronavirus shutdowns an employee of the theatre industry in New York City—one of the hardest hit industries in the hardest hit city in the hardest hit country in the world. The grimness of this reality has been the root of a lot of anxiety, but there is one thing that has helped to alleviate the stress: my emergency fund.
I’m incredibly fortunate that I recently reached my goal balance for my emergency fund, a project that began when I could hardly conceive of a scenario that would trigger its use—much less that such an event wasn’t far off. It’s somewhat ironic, but the reasons I’m so economically and professionally vulnerable during this pandemic are also the reasons I’ve learned to diligently monitor my financial health, to develop skills that better position me to weather these uncertain times. The reality of pairing lower-income work with a high cost-of-living area has required practiced devotion to budgeting, frugality, and saving.
The lessons my lifestyle have afforded me are now being hastily learned across the nation, as we attempt to navigate these unprecedented days. It’s not enough, however, to learn these lessons now; we must also ensure that we continue learning, even as better times roll around once more. Use these days, however anxious and unsettling, to demand of yourself: never again. Never again will you be financially unprepared to weather the storm. Never again will you squander money you could have saved. Because, one day, that money just might save you.
Big City, Small Budget 