I was cocky. I thought I knew how personal finance worked.
After all, I trawled through investment websites, budgeted, calculated, and pored over my spreadsheet for hours on end each day.
I thought having a pool of emergency funds that lasted me eight months was good enough. With those funds set aside, I was free to dump all the cash net my expenses into the market.
But bam – things started changing. My steady stream of guaranteed income stopped in November 2024. I decided to try out a one-month digital nomad life. Then, I had to account for three other trips in mid-2025 that were spontaneously accepted.
As my cash dwindled and hovered around the magic number I deemed “safe” a few months ago, that was when…
I panicked.
The truth is, no amount of calculating, reading, or watching can genuinely recreate the power of fear and uncertainty over the lack of a strong safety net.
I diligently saved up my emergency funds. I watched a YouTuber’s video on what it was like to get laid off at 40 years old. I listened while my dad recounted being retrenched during the Great Recession.
But what I don’t have are the emotional scars of those who actually experienced it.
While theoretical understanding of financial vulnerability can be gleaned from others' experiences, it remains a mere shadow of the lived reality.
We see the world through a different lens until we genuinely experience it ourselves.
My spreadsheets can model my savings and expense rates. But they can’t show me that feeling of unease as I spend what I earn with none left for investments or savings. The numbers couldn’t have predicted that I now have to think twice about every action I take. They couldn’t have spelled out the trade-offs I’m now making – prioritising growing my own business and seeing the world which means cutting back on eating out, entertainment, and buying things on a whim.
True peace of mind comes from having a strong safety net.
In fact, I always thought richer individuals could afford to take more risks.
But here’s where it gets interesting.
A Boston University study showed that kids from lower socioeconomic status took more risks than their peers. The researchers proposed that developing organisms learn to use different risk strategies based on the availability of resources and the extent of their needs.
A well-fed fox, for example, is unlikely to risk entering dangerous territory for a large meal when a small, certain amount of food is readily available. A hungry fox, however, is more likely to take chances for a big dinner.
This biological imperative, this fundamental risk calculation, isn't just for foxes. It's for us too. My “safe” eight-month emergency fund, in theory, should have provided a sense of security.
Unfortunately, I was a well-fed fox suddenly thrown into a landscape where the familiar hunting grounds had shifted. My initial calculations were rooted in a theoretical understanding of risk, but they failed to account for the emotional weight of uncertainty.
And that's precisely why peace of mind is the most underrated thing.
Think about it:
Peace of mind allows for clearer decision-making. When anxiety clouds your judgment, every choice feels fraught with danger. My worried state led to overthinking, second-guessing, and a general sense of unease that hindered my ability to focus.
Peace of mind fosters creativity and innovation. When you're not constantly worrying about survival, you have the mental space to explore new ideas and take calculated risks. The fear of losing my safety net stifled my energy, making it harder to adapt to the new circumstances.
Peace of mind enhances well-being. The constant stress of financial insecurity takes a toll on your physical and mental health.
The Boston University study highlights that risk-taking is often driven by necessity.
But wouldn't it be more empowering to take risks from a position of strength, a place of genuine security?
Not a false sense of security derived from a spreadsheet but a deep, visceral understanding that you can weather any storm. It's all about the emotional resilience to navigate the unpredictable.
And that’s why I’m still learning to overprepare and underworry in life. Starting first with keeping at least 25% of emergency funds in semi-liquid cash.
The most important part of any of my plans is now planning on my plan not going according to plan.
Because you never know what may happen.
Cheers,
Val