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Finance Friday: Emergency Funds

Welcome to Finance Friday 2018! All year long, we’ll talk about personal finances on the first Friday of the month, with the goal to getting us all in better overall financial shape. We know horses are expensive, and we need to be ready as we can for those expenses – both planned and unplanned.

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Starting in January, we all set financial goals. In February, we talked about setting budgets, and then in March, we talked about staying within those budgets.

This month, I’m thrilled to share a guest post by Carla of The Frugal Foxhunter about emergency funds.

Why I Don’t Own a Horse Yet

For my entire life, my dream has been to own a horse. I have enough to buy a horse in my savings. Horse upkeep fits in my monthly budget, so long as I don’t choose one of the fancier DQ barns to board. So why not just DO IT?!
It’s infinitely tempting but I will not buy a horse until I have enough money saved to buy him outright–and an emergency fund for him on top of that. In fact, all of my pets have an emergency fund since my stupid cat Beckett taught me the hard way how useful it is to have one.
Why You Need an Animal Emergency Fund
I was fresh out of college, in an entry-level editorial job, and my boyfriend and I had inherited this spastic little Bengal kitten from a family member.
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Little Beckett was running short on lives. Just two weeks before he came to us, he had fallen out of a 9-story condo balcony–just walked right out between the slats. A leafy tree broke his fall, and the vet said he had no physical damage. (After living with him for 5 years I can now say he CERTAINLY has mental damage.)
For the first few weeks with Beckett, we enjoyed our weird little critter to play with and take endless photos of. Then he stopped eating. For days, he couldn’t keep down any food, but was still the frenetic little kitty we were used to. Then he took a turn for the worse–not drinking all day, acting listless and weak. We worried he had eaten a piece of string from a woven blanket, and may have had an impaction. We rushed him to the emergency vet. We had no idea what it would cost. Tearfully, we agreed that if it cost more than we had in savings (not much), we would have to put down our new kitten.
After inconclusive X-rays we decided just to treat his likely dehydration from a week of not eating. Cha-ching! $600 bill and our savings were crushed. Luckily, the fluids did the trick and Beckett perked right up to continue his reign of terror on our household. Even luckier, my aging Ford Focus decided to hang on for another two years–not needing major repairs until I had much more in my ‘piggy bank’.
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It’s morbid, but in my opinion, all pet owners should have at least enough put away to euthanize their animal if there is a veterinary or financial emergency. Ideally, you can save more than that so unexpected veterinary bills are not a strain on your monthly budget, and do not disrupt your other financial goals. A pet emergency fund also gives you a frame of reference of whether a treatment is “worth it.” You know how much you have in your account. Let your reserves tell you what you can afford, not a vet who doesn’t pay your bills. (Can you tell I’ve had some bad experiences with overzealous vets?)
Horse veterinary bills can be a LOT bigger than cat and dog veterinary bills. We all know how accident prone horses are, so we know emergencies will happen, even if we have no idea when. Having a horse emergency fund will provide so much peace of mind knowing you can afford an unexpected emergency without debt.
How to save for an emergency fund (of any kind)
 
Whether it’s for you or your pet, saving for an emergency is not complicated. It’s not easy, but it is simple. Spend less than you earn, and save the excess.
Figure out your core monthly expenses (non-negotiables like mortgage payment, food, utilities, etc.) and discretionary expenses (optional expenses). Is there room to save at all on your discretionary expenses? Perhaps you have subscriptions you rarely use, or other items you can cut back on. Once you figure out how much you can save each month, your first priority should be adding to your own emergency fund.* I know you love your animals, but think of what they tell you on an airplane. Put on your own oxygen mask first. If you are broke and you’ve maxed out your credit cards because you have no savings, how do you think you’re going to pay board?
Whether you’re saving for yourself or your pets, pay yourself first. Everyone says this because it’s true. If you automatically transfer money to savings when you get paid, the money is out of sight, out of mind, and away from temptation. On the other hand, if you wait to see how much is left over to save at the end of the month, you’re likely to fall short of your goal. It’s just too easy to use the money if it’s there and available to spend.
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How do you figure out how much to save in a horse emergency fund? This is not a typical personal finance question covered in Kiplinger or CNBC! It is up to you, but I think 3-6 months of horse upkeep costs would be reasonable. If your income is very stable (ha ha pun not intended) and you have plenty of flex in your monthly budget, you could lean more towards 3 months, and if not, I would lean more toward a bigger fund because it allows you to have less stress in times of lower income. Horse insurance is also an option for really pricey potential surgeries.
As I said, I would love to have a horse and could probably squeak by if nothing were to go wrong. But after 5 years of leasing, I know things do go wrong, and I don’t have a horse emergency fund yet. Heck, right now I’m just working on saving to upgrade from a pancake-flat Crosby saddle! For now, a half-lease on a fabulous hunt horse works for me. It’s a fixed monthly cost, with no need to pay unpredictable veterinary bills or make the tough decisions and tradeoffs that come with having horses on a budget (particularly where I live in a pricey metropolitan area). I can still enjoy the sport I love with an animal whom I grow closer to every year. I’ve got a good thing going, so I’m taking my time to approach my eventual goal of horse ownership in a way that doesn’t threaten my financial security now.
*There are a number of other financial goals you may need to address before creating an emergency fund for your animals–but covering them is way beyond the scope of a horse blog.
Good seat
 
Carla LaFleur is an avid foxhunter who half-leases a disgruntled OTTB named Lefty. She blogs at The Frugal Foxhunter and sells framed bits on Etsy. She is not a financial advisor, and this article represents her personal opinion, so don’t get your breeches in a twist about it!
(If you have an idea that would fit with the Finance Friday theme, and you’d like to write a guest post, email me to talk about it!)
Well, let’s hear it. Do you have an emergency fund? Not yet? Is an emergency fund important to your financial goals, or has it helped you out in some way in the past?
And how about the overall financial goals you set for yourself at the beginning of the year? How are those going?

3 thoughts on “Finance Friday: Emergency Funds

  1. Yup, I firmly believe in emergency funds and believe you need an easy access $1-2k for an actual emergency. (regular car maintenance or horse maintenance is not an emergency). Then another 3-6 months of expenses in semi-easy access in case you lose your job.

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  2. I always kept a bunch of money in savings. I never really called it an ER fund, but I always wanted to have enough that I could pay for something if I needed to. I’m always seeing people selling really expensive tack because their horse got sick and they need to cover vet bills and I think, clearly you’re not poor if you bought that saddle new, so how do you not have something saved for the vet?

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