Your Emergency Fund Needs To Be Rebranded As A Safety Fund

Welcome to the Margins Memo! I am so glad you’re here. Each week, I’ll take a deep dive into how to navigate hidden systems that keep you from wealth, time, energy, and safety—and the blueprints to building something better.

I was having dinner with a colleague after a jam-packed day of back-to-back interviews for a work site visit. That’s when I got the call from my uncle. Whenever this particular uncle calls, it’s always because he has some bad news to deliver. It was my father. He was admitted into the hospital and they couldn’t figure out what was wrong. 

“How soon do I need to come see him?” I asked. This is code for “Is my father lying on his deathbed?”

“He can’t bend his knees,” my uncle says nonchalantly. That was my cue to book the earliest flight to go see my father the next morning. 

The moment I set foot into the hospital room, my father burst into tears. That’s when I knew. I had to move back home. My father is a widow and I am an only child. I’m also a daughter of East African Indian immigrants (read: putting your parents in an old people’s home when they fall ill isn’t a thing in our culture). I had an unspoken agreement with my father: when the time came, I’d move back to take care of him. One of my aunts had already warned me earlier in the year: “Your dad is a ticking bomb.” She is not one to mince her words. 

Though I considered moving back earlier that year, I thought I had more time before I had to put things in motion. It turns out I didn’t. That’s the thing about emergencies, they don’t happen on your timeline. 

So I packed up my life into a bunch of boxes and completed my cross-country move. I was then forced to resign from my job after being loyal to the company for several years. This was during the pre-COVID era when working remotely “wasn’t an option.” I turned in my keys on my birthday. Happy birthday to me. 

In the span of a few weeks, the life I once knew had been completely up-ended. And my father and I were navigating a lot of uncertainty:

The multiple potential fates that could unfold during my father’s ailing health

The not knowing if my father was ever going to return to work

The unexpected (and not cheap) cross-country move

The sudden loss of my primary source of income

The making sure all the typical bills were paid

The growing pile of medical expenses

My emergency fund was shrinking faster than a wool sweater straight out of the dryer. At the time, I had taken the poor advice of my financial advisor (sidebar: we’ll get into the difference between a good and bad financial advisor in a future newsletter) who instructed me to contribute to my investments instead of padding my emergency fund. At some point, I ended up liquidating some of my investments to cover my expenses. This is generally considered a big no-no. I hadn’t really mapped out the financial implications of caregiving because nobody told me to, including my financial advisor. 

When we zoom out and see the bigger picture, we start to see how the economic effects of family caregiving on women and—which disproportionately impact women of color— can be quite devastating. Caregivers usually take a financial hit in three key ways. The first, which may seem quite obvious, is the financial strain. What this looks like: taking on more debt, not being able to pay bills or paying them late, using up short-term savings, and borrowing from friends and family. This in turn leads to the second effect: diminished capacity to save. Many caregivers end up dipping into their short-term savings, the long-term savings, or stop saving altogether. And then there’s the third effect: long-term impacts on economic security that are tied to disruptions in employment, which include reduced work hours, stopping paid work, and even early retirement.  These disruptions can lead to not only missed promotions, lost job tenure, job skill erosion, but also missed opportunities to contribute to retirement and social security. ² On average, caregiving can cost women nearly $300,000 in lost wages and retirement income over a lifetime. ¹

The toll caregiving takes on caregivers isn’t purely financial. Caregiving also greatly impacts physical and emotional well-being. The all-consuming nature of caregiving often leads to social isolation and loss of enjoyment in hobbies. It is not uncommon to experience depression, anxiety, and even burnout.  Ironically, caregivers often fail to give care to themselves because they lack time and energy to maintain healthy eating and exercsie routines or keep up with regular doctor appointments. The ongoing stress of caregiving can show as a body aches pains, sleep disturbances, weight changes, and even a depleted immunity system. These physical issues compound over time and lead to increased risk for heart disease and mortality. Without question, the cost of caregiving is high.

This is all further complicated by the sandwich generation. And no, I am talking about a generation of people who devour Jimmy John sandwiches as their main sustenance. I am referring to the folks that have to juggle raising children while caring for aging parents at the same time. In short, caregiving, especially for sandwichers, is financially, physically, and emotionally draining.

So what does this have to with multiplying your margins? Let’s get into it.

The glaring underinvestments in care infrastructure means you need to build your own financial safety net. This cannot be overemphasized as long the U.S. remains the only industrialized country that does not provide federally mandated paid family leave. In most cases, the “save 3 to 6 months” in emergency savings simply doesn’t cut it because it does account for all the economic effects of caregiving. This advice is as useful as having a crockpot full of crickets. If you anticipate being a caregiver at any point of your life, consider having savings earmarked specifically for caregiving. You need to think of your emergency fund as a financial safety fund.  This fund creates margins so you can navigate uncertainty—unexpected life events, a market crash, or career setbacks—with a sense of calm. Because once you do, you are not forced into decisions like liquidating your investments during an economic downturn.

If you’re expecting to be a caregiver in the near future, optimizing for flexibility in your work schedule is paramount. If your work environment currently doesn't offer flexibility, work towards landing a role that does if possible. If you own a business, work towards building systems and enlisting support so you can step away from the business while it still runs. Being able to take time off so you are fully present as a caregiver is critical at this stage of your life. 

The time constraints of caregiving are real, so enlist help where you can. Building an intentional community of trusted family (yes, including your partner), friends, and neighbors will support these efforts. You may also need to spend money to save time, if your budget allows. This approach is particularly helpful for tasks 1) you’re not particularly good at; 2) you don’t enjoy; or 3) no one else in your family is able or willing to do. Whether it’s hiring someone to blow leaves into a large pile or using Instacart to get your groceries delivered in time for dinner, the little slivers of time you save can really start to give you some breathing room in your schedule.

I’m not going to pretend I have a magic wand that will turn you into the Energizer Bunny as a caregiver. But I will say caregiving is not the time to let things slide when it comes to your physical and mental health. It’s the time you need to double down. Don’t skip the doctor appointments. Go to therapy. Join a class at your local YMCA. Schedule a weekly standing date with one of your friends to walk around the block. Set the phone on “do not disturb” so you can finally take a bubble bath. And make sure you are getting a good night’s rest each night. It’s easy to skip over the simple things. You need to constantly reassess what are the people, projects, things, and activites that create versus drain energy in your life. This will inevitably change and evolve over the course of your life.

Now that we got the “you should have more that 3 to 6 months in your emergency fund” out of the way, you’re probably wondering how much you should be saving. I’m trying to avoid giving you cookie-cutter advice in this newsletter, so in lieu of that, here a some reflection questions to consider:

Some saving vehicles that may be worth exploring (if you haven’t done so already):

Reply and let me know if anything resonated with you. And, of course, if you have any lingering questions. I read every response, and would love hearing from you.

See you in the margins,

Miloney