Why do I think an “emergency reserve” is a bad idea? It’s not that I think having a cash cushion is bad. I think it’s really a good thing to have. When there are available funds when you need them, this is a really good thing. It keeps people from using credit cards at high interest rates or needing to sell investments at inopportune times.
What I’m saying is that calling it an emergency fund is a bad idea.
To start, when you build an account with the expectation you’ll need it for some future disaster you are focusing your thinking on what you really don’t want to happen. This falls into the scarcity thinking camp. It’s going against the current.
A recent attendee in one of my courses on creating prosperity on purpose shared an “ah-ha” she had.
“My tangled beliefs around money (the ones that I have operated out of until now) included the “fear” that if I “save for a rainy day,” I would create the rain.”
This is so interesting to me. The woman who wrote this is very smart, and very conscious. She knows that thoughts create reality. Taking responsibility for your thoughts is fabulous, and examining if they are helpful or unhelpful is important.
“During your course, I heard someone say something like, “There is a difference between saving for something and saving to be prepared for hardship.” And now – all the people who are freaking out about the stock market, etc. occur to me as the latter type of people.”
Now – here comes the “Ah ha”…
“You do not have to have that ’freak out’ energy – even in this market. Your way of being is of a person who saves, not because there is a disaster that we need to be ready for. Your relationship with Money is healthy, not crazy. Thank you for giving me something to model.”
So, what should you call it?
As we talk about in Picture Your Prosperity, we suggest calling it a “solutions fund.” This is an idea I got from Denise Brown and love it. This is a fund that can be used for all sorts of things like starting a new business, giving you time to find the perfect next job, etc. And, doesn’t it just feel better to have a solutions fund rather than an emergency reserve?
Here’s to saving for the sunny days!
Every good wish,
+ Interested in improving your relationship with money? Feeling like you might have some beliefs or blocks in business and your personal finances you’d like to clear? Learn more here.