The Jesse Mecham Show

Delete Your Emergency Fund

Apr 17, 2025

Emergency funds are often seen as a safety net, but they can be vague and unproductive. Instead of just setting aside money for unknown events, you can assign specific jobs to your savings for greater clarity. By planning for predictable expenses like roof repairs or car maintenance, you create a more effective financial strategy. Rethinking your emergency fund allows for improved emotional management and empowers you to spend with confidence. It's time to consider trimming down those vague savings!

06:03

Creator website

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Emergency funds can create emotional barriers and guilt, whereas treating savings as unallocated spending alleviates this anxiety.

Assigning specific jobs to dollars enhances financial clarity and prepares individuals for predictable expenses, fostering a proactive approach to money management.

Deep dives

Rethinking Emergency Funds

Emergency funds are often misunderstood and should not just sit unused, creating an emotional barrier when an actual emergency arises. The concept of savings can lead to unnecessary guilt when it comes time to use those funds, as individuals may feel like they’re depleting a reserve meant for emergencies. Instead, treating savings as just spending money that hasn't been allocated yet can shift this mindset, making it more acceptable to utilize those funds for necessary expenses. By reframing the purpose of these savings and assigning specific jobs to each dollar, individuals can approach their finances with a more proactive and less guilt-ridden mindset.

Rethinking Your Emergency Fund: Assigning Dollars Specific Jobs

6min

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.

Watch The Jesse Mecham Show on Youtube:

https://www.youtube.com/@jessemechamshow

Got a question for Jesse? Send him an email:

askjesse@ynab.com

Follow YNAB on social media:

Facebook: @ynabofficial

Instagram: @ynab.official

Twitter/X: @ynab

Tik Tok: @ynabofficial

Tickets to YNAB Fan Fest 2025 are on sale now! Coming to San Diego, Minneapolis, and NYC:

YNAB.com/events