Why nothing compares to being prepared to face emergencies

Published: June 18, 2023 at 6:00 am

The following is an anonymous post in the Facebook group Asan Ideas for Wealth (AIFW) reproduced here after its admin, Ashal Jauhari’s suggestion.

“A real-life example to prove that there are only two kinds of people – those who have faced emergencies and those who have not. In the example below, this old friend – an AIFW member – freefincal reader was serious enough to hold an emergency fund” – Ashal.

Dear Ashal Bhai, would you please share this post in the group on my behalf? It contains personal details, so I want to post it anonymously. Over the years in AIFW, a lot has been discussed about the importance of having an Emergency Fund. Ashal Jauhari has made countless posts/comments on it. Pattabiraman Murari has written several articles about it on freefincal.com. This is an account of my personal experience.

Around four months back, my mother was hospitalised with acute stomach pain. Shortly, the doctors had to perform an emergency surgery. And a few days later, she was diagnosed with colon cancer, stage IV, not curable, terminal. She was at the hospital for about one month. After discharge, she was at home for around three months. She passed away three weeks back.

She had sufficient health insurance, which covered most of the hospitalization bill. Given the prognosis, we consulted multiple oncologists from across the country. They advised some more cancer-related diagnostic tests that were quite costly. We also got second opinions from two of the world’s top cancer hospitals: New York and Seoul.

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Those opinions came attached with a very high price tag. Due to the surgery, she required weekly dressings that had to be done by a specialist and supported by several surgical items. A doctor specializing in palliative medicine visited her regularly at home and prescribed medicines to manage the many symptoms caused by cancer.

Provisions were made for oxygen support at home, along with several other kinds of medical and non-medical arrangements. And no insurance covered the cost of *any* of those things.

But cost/insurance/money was the least of my worries during that period. The only things that mattered were what can I do to provide the best available treatment for my mother, how can I ease her pain and suffering as much as possible, and how can I provide her with the best possible care.

I could afford not to worry about money because, at the back of my mind, I knew I had a sufficiently large Emergency Fund to cover everything coming our way. Even though I was not necessarily using that fund right away. I was not in a mental state, nor had the time, to redeem from this mutual fund, break that fixed deposit, or do something else to a similar effect.

In fact, I had paused all my investments. Because such things simply no longer seemed important enough at that time. I knew all of those could be sorted out later. The only thing that I continued to do was pay my credit card bills on time. I’d read this somewhere: during a real emergency, every fund is an emergency fund (probably in freefincal.com, but maybe not in those words). They could not have been more true. Editor’s note – probably this post: Can you handle it when your entire wealth becomes an emergency fund? Also, see: What they don’t tell you about the emergency fund!

I had always imagined that the Emergency Fund would be what I’d be using *during* an emergency – sweep fixed deposits, liquid funds, etc. What had never occurred to me was that it could serve another purpose also. Become the source of a huge psychological relief, that I need not worry about money when money is needed the most, that I can afford to completely focus on the actual reasons why money is needed and not on the supply of money itself.

The previous sentence may seem confusing, particularly to those who have not yet faced a real emergency in life, especially a critical medical one. But, after having gone through such an experience, I found that realization to be profoundly significant.
Of course, each one of our circumstances is different, as are our experiences and ways of dealing with life. But regarding the financial aspects, nothing compares to being prepared to face an emergency. Nothing! That’s why in the BASICs (see the Featured section of this group), the first three points are all related to life’s emergencies. Everything else comes later.

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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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