The Impact of an Emergency Savings Account

The past several years have been a whirlwind for many of us in healthcare. Whether due to burnout after the pandemic, career transitions, or unexpected life events, stepping away from clinical work can feel necessary but overwhelming — especially when it comes to finances. I’ve been there myself, needing to live off my savings for a year after losing my job. This was a tough but eye-opening experience that highlighted the importance of having an emergency fund.

For my first non-clinical job as a medical device nurse educator, I actually took a 10% pay cut. I was so desperate to get out of patient care, that I was willing to work for less money. At least, that’s how it appeared at first glance. Between car allowance and bonuses, I ended up earning a little more than my clinical job. But my savings was definitely not where it is right now, so taking that initial pay cut caused a lot of anxiety in the short term.

Then around 3 years ago, I was offered a job in the pharmaceutical industry, and I jumped at taking it. I knew it was risky- I was taking a contract position with an end date of about 18 months. But it was a risk I decided was worth taking. My long term goal had always been to work in pharma, but most companies will not hire you without pharma experience. I needed that experience, even if it was temporary.

Because of that end date though, I knew I needed to plan accordingly. The switch from medical device to pharma came with a pay increase of more than 50%, and I used that surplus to fund my savings. I did get lucky, in that the contract was extended for another 6 months, and I received larger bonuses than I was originally told when hired. However, it paid off in the long run- when that contract ended a year ago, I was able to easily support myself without wondering if I was going to lose my house- or worse, going back into patient care. I was out of a job for a full year! Thankfully, my planning paid off, and I was able to live comfortably during that year off.

What are your long term goals?

Take a moment, before you start thinking about your finances, to dream a little. What do you want to do with your career? If you love your job and want to stay there forever, that is awesome! I’m so happy for you, and honestly a little jealous, because I don’t think I’ve ever felt that way about a job. But maybe there is something more that you would like in your future; that is awesome too! 

Do you want a job that is healthcare-adjacent (such as informatics, healthcare sales/education, or research)? Do you want to change careers entirely, and get out of healthcare? Maybe you would like to open your own business or practice? All of these goals require some kind of financing or financial cushion. Whether you need that money now to cover a pay gap or pay for education, or need it in the future to start your own business, some careful planning will save you a lot of anxiety related to finances. Also remember, none of these goals have to be filled tomorrow, so you have time to prepare and plan. Prepare for the unexpected.

Unexpected Costs When Transitioning Careers

Changing careers, especially from a scrubs-and-sneakers environment to a non-clinical role, often brings unexpected expenses. While these costs can feel overwhelming at first, planning for them can help ease the transition. Some of them never even occurred to me until they actually happened to me. Here are some common costs to keep in mind:

1. Professional Wardrobe: If your new job requires business or business-casual attire, you may need to invest in a wardrobe overhaul. I went from a closet full of scrubs to needing business attire. If you are just starting out, do NOT feel like you immediately need an entirely new wardrobe! Find a few pieces that mix and match well, for example, 1 pair of black and 1 pair of navy blue slacks, and find a small selection of tops to match; work on expanding later. Consider sales and thrift stores to minimize costs while building a versatile wardrobe. Don’t forget about shoes and accessories, as they can add up quickly. Personally, I love Stitch Fix; they’ve helped me tremendously in building a professional wardrobe built over time.

2. Travel for Training or Orientation: Many non-clinical roles require you to travel for onboarding or training. While some companies cover travel expenses upfront, others might expect you to pay and reimburse you later. Without a company credit card, you may need to front costs for flights, hotels, meals, and transportation. Even if you are going to be getting a company credit card, it takes a few weeks to arrive. This is rare, but it is happening to me right now with my new job- I recently started a new job, and was told on my second day that I needed to fly somewhere soon for training. Since I don’t have a company credit card yet, I am having to front the $900 plane ticket, and will be reimbursed later.

3. Technology Upgrades: If your new role involves remote work or requires advanced tech skills, you may need to purchase a new cell phone, upgrade your internet plan, or invest in software subscriptions. Check with your employer to see if these any of these costs can be reimbursed or provided; they usually are, but you may need to cover the cost up front. Note: be aware that if you are reimbursed for any equipment you purchase, your employer may own the equipment, and you will have to send it back on leaving employment; if you want to keep something, you are better off buying it yourself. If you are working remotely, a good phone is going to be your lifeline. If it’s been a while since you have upgraded, it might be time to consider it. 

4. Licensure and Certifications: Some roles outside of direct patient care might require additional certifications or a different state license. Fees for licensing boards, continuing education, or specialized training can add up. Again, these costs are frequently reimbursed by employers. However, if you are still in the job search process, and the certification is outside of your current role, you may be on the hook for the cost.

5. Workspace Setup: If you’ll be working remotely, you might need to set up a home office. This could mean buying a desk, chair, monitor, or other ergonomic equipment. These investments can improve your productivity and comfort but may be unexpected costs upfront. This one is usually not covered by employers. You may need to be prepared to spend anywhere from a couple of hundred to a couple of thousand dollars, depending on your current setup and the quality of equipment you decide to buy.

6. Car Insurance or Mileage Costs: If your job involves driving to different locations, you may need to increase your car insurance coverage. Many companies will require specific levels of insurance coverage. This may be higher than what you previously needed. If you become a road warrior, you may get lucky and your company issues you a gas card; but you may need to pay upfront for mileage until your company reimburses you. Keep detailed records of your travel to ensure you’re reimbursed accurately.

7. Legal and Liability: If you are planning on starting your own business or practice, making sure that you are protected both legally and through insurance is an absolute must. Those protections a necessary, and need to be factored into your start-up costs. 

8. Bridging the Gap: Moving to a new job may cause some disruption in your pay. You may get paid on a different day of the week, your new pay may come at different intervals, or maybe you are moving to a role that pays more on commission than base pay. Whatever the reason, you need to make sure that you have enough on hand to pay your bills and provide peace of mind during the transition while you adjust to a (possibly) new pay schedule.

Planning for these expenses is key to avoiding financial distress during your transition. Consider setting aside a small buffer in your emergency fund specifically for these types of unexpected costs. And don’t hesitate to negotiate or ask your new employer about reimbursement policies for work-related expenses—they may be more accommodating than you expect.

5 Steps to Saving

If you’re considering a career change, cutting back on hours, or just preparing for the unexpected, building an emergency fund is one of the smartest financial moves you can make. It will take some introspection and planning, but it does NOT have to be hard. Here are some steps to help you get started:

Step 1: Assess Your Financial Situation

The first step in creating an emergency fund is understanding your current financial picture. Seeing everything on one page honestly removes some of the anxiety. Take some time to:

• Calculate your monthly expenses: Include rent/mortgage, utilities, groceries, insurance, transportation, and any other regular costs. It doesn’t have to be on a fancy spreadsheet, a piece of paper and pen do the job just fine.

• Identify your debts: Cars, credit cards, student loans, personal loans. I know it can be daunting to look at that number, but write it all down so you can see the whole picture. 

• Identify non-essential expenses: Things like subscriptions, dining out, or impulse purchases. Knowing where you can cut back is key. 

• Set a savings goal: Aim to save 3–6 months of essential expenses. If you’re planning a career transition, consider saving even more.

Step 2: Start Building Your Fund

Creating an emergency fund doesn’t happen overnight, but small steps add up over time. I recommend having at least 3 months of spending in savings, more if your field is volatile. Here’s how to get started:

• Pay yourself first!: Set up a separate savings account and schedule automatic transfers, even if it’s just $25 a week. If you need to, set up a completely separate account and name it according to your goal- “bachelor’s degree”, “rainy day fund”, or whatever you plan to do with it. My bank actually allows you to give your accounts a name; seeing that name whenever you open your banking app can be motivating.

• Save extra income: Use bonuses, tax refunds, or overtime pay to boost your fund. Keep an eye out for class actions you may be eligible for- those have boosted my saving by a couple of hundred dollars over the years, and they only take a minute or two to fill out.

• Track your progress: Watching your fund grow can be motivating and help you stay on track. Apps such as Empower (a free app that tracks account and debt balances in one place) and You Need a Budget (An app that helps you track debt, saving, and budgeting, and costs $14.99/month), or even a digital spreadsheet that you can buy from Etsy can help you visualize your savings across multiple accounts.

• Trick yourself: For some people, it’s just not as easy as moving money to a different savings account, and you need a way to save creatively. Check to see what your bank offers- some banks will automatically round up every time you spend and put that extra into savings for you. Maybe saving cash makes it more exciting for you; try saving all of the $1 bills you receive as change into a sealed box like this or this. 

There are lots of different ways to start saving, even if it’s just a little at a time. This isn’t a finance blog, so I’m going to refer you to this blog post that has some amazing suggestions on different ways to try and save money.

Step 3: Take Advantage of Healthcare-Specific Opportunities

Healthcare workers often have unique opportunities to earn extra income or cut costs:

• Pick up overtime or PRN shifts: One of the perks of working 2 or 3 shifts a week is that you have lots of extra time in your schedule. Volunteer to work an extra shift or two a week. Some hospitals even offer cash bonuses if you are called into work on short notice; take advantage of that if you can. You could even look at getting a second job; you might even find your take home pay is a little higher at a second job since you won’t need to pay for benefits like insurance. I am NOT advocating for you to do this forever! This is to help you get to a more financially stable place.

• Start a side hustle: Your knowledge has value. Consider options like tutoring healthcare students, creating educational content to sell online, or starting a healthcare related social media account. I think we all have our favorite healthcare social media personality (I have about 10!). If you search Etsy, there are plenty of different study guides written by people just like you, earning extra money by just writing that information down and making it look pretty. 

Step 4: Reduce Expenses Without Sacrificing Too Much

Cutting costs doesn’t have to mean drastic lifestyle changes. Look for small, sustainable adjustments, then add the difference to your savings account:

• Meal prep: Save money by planning and cooking meals at home (Psst- this can also save you money by helping you eat out less).

• Review subscriptions: Cancel or pause services you don’t use regularly. 

• Carpool or use public transport: Save on gas and parking fees. 

Step 5: Plan for the Future

Once you’ve built your emergency fund, keep the momentum going:

• Automate contributions: Even after reaching your goal, continue saving a small amount each month.

• Pay off you debt: It is so freeing when you finally have no payments. 

• Replenish after use: If you dip into your fund, make it a priority to rebuild it.

• Consider other savings goals: Start planning for retirement, education, or a dream vacation.

A Safety Net for Peace of Mind

Having an emergency fund isn’t just about financial security; it’s about peace of mind. Knowing you have a cushion to fall back on can make all the difference when life throws you a curveball. Looking back on my year without a steady income, I’m grateful for the steps I took to prepare, even if I didn’t realize it at the time.

If you’re feeling uncertain about the future, take that first step today. Open a savings account, set a small goal, and start building your financial safety net. Your future self will thank you.

Disclaimer- I am NOT earning any income from any links posted.

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