On a recent episode of the Akimbo podcast, host Seth Godin discussed the benefits of including “slack” in the things we do. While we’d like to imagine our systems being efficient, tight, without waste—zero slack—the truth is that slack is almost always present, and typically of vital importance.
Slack is why sports teams have substitutes.
It’s why college schedules have a 15 minute spaces between lectures.
Or we can think about Seth Godin’s example: slack is why fire departments are staffed 24/7.
Slack gives us room for error, room for mistakes. It’s a safety net. Without slack, we could be one misstep from losing the game, or missing the class, or not having the firemen needed to put out multiple fires at once.
Slack isn’t needed 100% of the time. That’s why it can feel wasteful, or even unnecessary. “I only put 5 players on the court at a time. Why do I need 12 players on the roster?!” But when that slack is needed, it is vital.
When I heard Godin discuss this idea, I immediately thought of its application to our financial lives.
Our emergency fund is slack.
I’ve briefly discussed the emergency fund before. An emergency fund is a pile of money, plain and simple. Some people suggest it should be at least $1000, enough to cover a sudden car repair or new water heater. Others think it should be 3-6 months of living expenses, in case you lose your job and need to find another. Either way, the emergency fund money just sits there in your bank account. You aren’t spending it. You aren’t investing it. It provides a tiny bit of interest (probably), but provides no utility (most of the time).
But—and this is a HUGE but—when an emergency fund is needed, its importance cannot be overstated. It might keep your children warm when the furnace dies mid-winter. It keeps the family fed and clothed when the factory lays you off. It’s the buffer between smooth sailing and impending disaster. It’s a safety net when life throws you the worst kind of curveball.
In an ideal world, you never have to use your emergency fund. Your life is wonderful, everything goes according to plan, and the unexpected never occurs. In this world, the starting pitcher throws all nine innings and his arm feels great. Grandma lives a beautiful and fulfilling life before passing away peacefully in her sleep. The car starts every morning, and the roof never leaks. This world is amazing.
But does that sound like the world that you and I know?
We can hope for the best, but we should plan for the worst. If you don’t already have an emergency fund, there’s at least one blogger writing to you at this very moment who would suggest: “Start building up your emergency fund. Slowly at first, that’s perfect. But it’s imperative to try to build that slack into your financial life.”
Provide your budget with substitute players.
Give yourself extra time to get back on your feet.
Overstaff your accounts in case there are multiple fires at once.
No need to be too self-critical. Just cut yourself some slack.