Episode #25: How My Emergency Fund Saved My Bacon During The Pandemic

So, this is my personal, very close to home story of how Covid 19 totaled my business for most of 2020, and a lot of 2021, and how the emergency fund I’d create a few years ago actually went to use keeping me safe, paying my mortgage, and most importantly keeping me sane and mentally healthy while I re-evaluated, pivoted, and launched a new business.

If you just know me from my current business The How To Adult School, this isn’t what my career path has been to date.  My first business was a wedding photography business.  I launched it basically right away from when I graduated, I was lucky to get to dive into it headfirst full-time right from the beginning, it scaled up to my maximum booking capacity really quickly, and was doing really well.  I ran that for 5 successful years, it generated good income, I had the freedom and autonomy that I’d always wanted, and I loved it.  At the end of 2019 I was making plans to expand, hire on new people, and start building a team of photographers because my biggest limiting factor was myself. I can only book so many weddings because I was doing all of them, so it was time to look at moving into becoming more of a studio model if I wanted to keep growing.  

Life was going well. We bought our first home at the end of 2019, I started saving for the next piece of property we wanted to invest in, and at that point my wedding photography business was pretty automated so I started saving a little bit of money to put towards my new business idea, fthe How To Adult School, which I’d had on the backburner since like 2016 or 2017, and it finally felt like I had the time and space in my life to start building and growing a new business.  Which was really exciting, I was loving it.

And then, March 2020 rolled around, the Covid 19 pandemic hit, and as we all watched the world seemed to shut down all at once, and in the case for us here in Canada at least, not open up again for a really really long time. 

Now in my life, simultaneously as I was watching the world shut down, I was watching all of my wedding bookings for 2020 start to postpone for another 1 or 2 years, or cancel outright.  I ended up losing almost all of my pre-planned pre-booked income within the span of about a month.

And that was scary, like really scary.  Because I had to continue spending money on the business, to keep my doors open, to keep providing some of the services that people had paid for, but I was unable to perform my main service, actually photographing a wedding, that brought in the cashflow needed to sustain the business.  It’s not like I could cancel my business insurance just because there were no actual weddings happening.  So, I suddenly had contracts that were stating that I would provide these products and services over our time working together, but didn’t have any cashflow to pay for those products and services and the level of service that people expected.  And obviously because I didn’t have any cashflow to sustain the business, that also meant that there was no money coming in to pay myself, to pay for my life, and my bills, like the brand new mortgage I’d signed just a few months before.

So how did an emergency fund help me?

When I first started the business, I knew that I always wanted to be an entrepreneur, but I also knew that I was very risk averse.  While I craved the freedom and autonomy of entrepreneurship, I knew I needed to create a safety net that would allow me to sleep well at night.  So, I decided to create an emergency fund. Because the booking process of my wedding business worked on an annual cycle, I decided that I needed my emergency fund to cover a year’s worth of living expenses, to give me time to pivot if I ever needed to.  Now I didn’t build this fund in case of a pandemic, realistically I thought maybe it would be there if I ever say injured myself right at the start of a wedding season, but hey, that’s the point of an emergency fund, it’s usually something completely unpredictable that you cannot mitigate for which lands you in the position of needing that money.

According to most traditional financial advice, a years’ worth of expenses is more than the average emergency fund, and having that amount of liquid cash in an account was considered crazy. But, I knew that as someone committed to being self employed I needed to build my own safety net, and it was also my sanity.  It gave me the freedom to turn away business opportunities that weren’t good for me, play around with the business to take risks and grow.  And over the years as my annual cost of living increased slightly, I topped up my emergency fund as needed, and it was great to have. I never touched it, but I could make logical decision and sleep soundly at night knowing that it was there.

Then, when my partner and I bought our house in 2019, we created a separate emergency fund backup for the house as well, where we knew that all our house expenses would be covered for a year in case we needed it.  Lots of people thought we were crazy for not putting the extra cash into the house, but we’re both self employed, and again we knew that this was a safety net we needed in order to be comfortable making this kind of large purchase in our lives.  

It all came together such that at the start of 2020 we had a joint home emergency fund, and I had my own personal emergency fund as well that meant I was covered for at least a year of living expenses in case anything happened to my business.

So, while yes things sucked when the pandemic hit.  It sucked to lose almost my entire income for the year, and it bit to have to tuck into those emergency savings accounts, that’s what they were there for and I felt so fortunate to have created that emergency fund safety net years before.  So yes, I was stressed, yes, I cried, a lot, and yes I was so mad about the situation, all the time, but I didn’t completely freak out because I knew I had some freedom, and I got to choose how I could use it now.

So, what did I do?

Because I had an emergency fund, I had the freedom to sit back for a while and evaluated things.  At the time I could see that this was going to vastly impact my wedding photography income for 2020 and 2021 as well, and the way I saw it I could do one of two things.  I could go out and get a part time or full time job during the pandemic, and then juggle that with the hours that I still had to put into my wedding photography business, which didn’t appeal to me very much. 

Or option #2 I could thank past me for putting together a good emergency fund and actually use it for what I created it for.  So, I decided to take a risk on myself.  I cut my living expenses down to the bare minimum so I could potentially stretch the fund longer if I needed to, and decided to pour all of my time and energy into diversifying my self employed income streams, and fast track my plan of starting the new business, The How To Adult School, that I had been saving up to build the groundwork for anyways.

So, right away I used the resources I had and built two print shops.  One was part of my wedding business, offering prints and albums to past clients online to generate a bit of cash flow, and one was a separate business still photography related though called the Georgian Bay Print Shop where I now offer large scale framed landscape photographs of Georgian Bay and area and a coastline that I love.  Those immediate actions were designed to bring in a trickle of cash flow to support the business expenses that I still had to maintain.

Then I turned my attention to building and launching The How To Adult School.  It’s taken me over a year to get to this point, it was a massive undertaking to learn how to do this, and to build everything behind the scenes here, but it was something that I had the time and freedom to do because I’d built that emergency fund.  It allowed me the chance to bet on myself again, and to create something that I hope will be good and helpful to people during a time when I otherwise would have panicked as my other business withered under pandemic lockdowns. 

I’m not going to pretend it was easy, yes the freedom was great but it was stressful, I did lose sleep, I cried, I ate probably hundreds of frozen cookie dough balls from our deep freezer, I doubted myself, I waded through miles and miles of imposter syndrome to start this (and still do), BUT I couldn’t have even had the option of being here if not for my emergency fund, and THAT is why I’m so passionate about teaching people how to create this for themselves, and dedicate so much time to teaching you how to build your own emergency fund and safety net.

So, hopefully if you don’t haven’t saved an emergency fund, or if it’s not fully funded yet, this has re-inspired you as to why it’s really important to set this up for yourself. YOU.NEED.AN.EMERGENCY.FUND.

Starting an emergency fund, even a small one, even just starting with Dave Ramsey’s $1,000.00 model, is your #1 priority if you want to start managing your finances properly.  As soon as you have the freedom of knowing that you have emergencies or unexpected expenses covered without having to put it on your credit card, you’re going to sleep so much better at night, and suddenly you’ll be able to make more rational and logical decisions around things like saving and budgeting.  It’s really the foundational building blog that it’s up to you to build for yourself. 

So, in the interest of time I’m not going to get into detail about how to save an emergency fund in this episode, this one was more of the ‘why’, but I have created other episodes about the ‘how’ of it all and will continue to do so.  So right away I recommend going to check out episode #16 10 Tips To Save For Your Emergency Fund More Quickly, and episode #6 How to Start Saving an Emergency Fund.  These are both great starting points to begin building your own fund. 

Linked Resources

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