If you read about personal finance on a regular basis, you will often see people talking about how everyone should have an emergency fund. Different people have different opinions of how big emergency funds should be, but generally amounts range from $1,000 to a year's worth of living expenses.
After we paid off $80,000 of student loan debt, my wife and I chose to save up six months of expenses for our emergency fund, and we diligently saved until we hit our goal. Just about a month ago, we found out exactly why people recommend having an emergency fund. It wasn't pretty.
Our Major Health Scare
A few months ago, my wife and I welcomed our first baby boy to the world. It was a very exciting time for both of us. The fact that we were first-time parents meant that we had no clue what to expect. But overall, parenthood has been amazing.
Unfortunately, we had one of the worst possible experiences just a few weeks after our son was born. My wife and I had noticed our son would turn a little blue in the face when sitting in his car seat. Since he was born prematurely, this is somewhat normal. However, we followed up with the doctors just to be sure. The doctors assured us that it was likely just an issue with our son being premature and the fact that he couldn't hold his head up by himself yet.
We solved this problem by having my wife sit in the back of the car with the baby to make sure he had his head up at all times. However, the doctor had run into a few scares with other patients recently, so in an abundance of caution, the doctor ordered heart tests to make sure there wasn't a bigger issue.
We took our son to get the heart tests done, and a couple of days later, we received an alarming phone call.
An unexpected medical complication
The doctor would be calling shortly to explain, but we needed to go see a specialist five hours away that day. Needless to say, we were freaking out. The doctor called 20 minutes later, but that wait felt like an eternity. The doctor informed us that the heart test indicated that our son had transposition of the great arteries – a major heart defect that would need to be corrected as soon as possible with surgery. As a parent, that's some pretty awful news.
What made things even more complicated was the next call we received 30 minutes later. The doctor who read the test called back and said he was no longer sure our son had the heart defect that we were informed about just minutes earlier. Our pediatrician suggested that we get a second opinion in town.
Unfortunately, the only place to get a second opinion in town didn't take our health insurance. This is where the emergency fund came into play. The doctor's office informed us that they usually charge $1,100 for the test we needed, but because they didn't take our insurance, they were willing to perform it for $400.
Now I don't know about you, but $400 is still a lot of money. But when it came to our son's health, it didn't matter.
We had the doctor do the test without hesitation. It turned out that everything was fine with our son's heart. He doesn't have transposition of the great arteries and won't need heart surgery. We were so relieved.
How our emergency fund made things a bit easier
I wonder what would have happened had we not had the $400 to pay for the second tests. In reality, my wife and our son would have been transported by ambulance to the specialist five hours away. I would have travelled there in our own car. We would have had to pay for hotels, and I'm sure that the medical bills would have far exceeded the $400 second opinion. They likely would have ended up being thousands of dollars.
It's at times like these that emergency funds are necessary.
No one wants to think something awful will happen to them, but at some point, it will.
When that happens, money should not be a factor in deciding what will be done. Emergency funds allow you to take money out of the picture in many cases. We're glad we weren't stressed out about money when we were focusing on our son's health.
If you don't have an emergency fund, start saving today. Even small amounts will slowly add up until your emergency fund is fully stocked. When the time comes and you need it, you'll be glad that you saved that money. We sure were.