Saving money before I need it means I can use it as an 'opportunity fund' to live my life to the fullest

I spent years paying off credit card debt , so I built my emergency fund a little late in the game. However, once I was debt-free, I funneled as much money as I could each month into a high-yield savings account that would act as my emergency fund .

On average, I transferred $3,000 each month into my savings until I had a balance of $30,000. As a freelancer with an unstable income, and as someone living abroad and far from any relatives, having a generous emergency fund is even more important.

With $30,000 in my account, I had a year's worth of basic living expenses saved rather than the typical recommendation of six months.

How I built my emergency fund from scratch

I think it's important to rewind a little here and explain how I was able to funnel that much money into my savings in the first place. The key is simple, in theory, but harder in practice: increase your income, decrease your cost of living.

Because I'm self-employed, I have a degree of control over my income. I worked hard to learn skills that were in-demand and lucrative, and then to build a healthy base of clients who would pay me well for those skills.

Eventually, I was able to nearly double my salary from my old, full-time office job. Apart from learning the right skills, I'd say a big part of what helped me do this was never settling. I allowed myself to outgrow clients by raising my rates regularly and dropping clients who couldn't keep up, only working for those who truly helped me achieve my income goals.

Then, there's cost-cutting. My preferred method is to decrease my fixed and necessary costs, such as rent, transportation, and food, rather than flexible costs like shopping and going for drinks. While it's important to keep both under control, I find that cutting out lattes just doesn't give me the big financial boost I'm going for.

Instead, I live in a small place in a rural area where my rent is extremely affordable, and I drive an old used car that I paid for in cash. Food is also cheap where I live, and I try to meal prep as much as possible to avoid eating out too much.

Combined, these two methods have allowed me to save at least 50% of my income every month, making the building of my emergency fund a breeze.

That is, until I ran into some trouble right before the holidays and had to dip into my emergency fund multiple times.

Why I was glad I had an emergency fund

The series of events all started with a five-week trip through Europe with my partner. This was a trip we'd been dreaming of for years, and I finally felt like I was financially ready to pay for it.

I purchased our flights using credit card points and saved up $7,000 to cover both of our expenses during the trip. We planned to stay in budget accommodations and travel via low-cost buses and airlines, so I assumed this would be more than enough.

It wasn't.

As it turns out, being in Europe together for the first time, and all of the romance that accompanies that experience, made both of us feel more than a little lax about staying on budget.

We splurged on hotel rooms with ocean views, promising to stay in hostels the following week, and then ate beautiful, multi-course meals almost every night.

"We're in Italy! We have to order the antipasto, and the pasta, and the tiramisu...and a pitcher of wine," we rejoiced.

That is, until I checked my bank account.

Little more than halfway through the trip, we'd already blown through almost all the money I saved. I was stressed about going over budget, but thankfully, I had more than enough money in my emergency fund to cover the rest of our trip without draining it entirely. I transferred $3,000 into my checking account, and we used that to cover the remainder of our trip.

Considering I had $30,000 in my emergency fund, this would've been a very small blip if it weren't for the events that followed as soon as we got home.

Within a week of returning to our house, the transmission went out in our old car. The repairs would cost about $1,500, so I logged on to my savings account and made the transfer. My balance was now down $4,500. But wait, there's more!

I'd whittled down my workload to part-time before setting off to Europe so that I could enjoy our once-in-a-lifetime trip. Unfortunately, as a freelancer, if I slow down for a month, work slows down for the following month, too.

Working my contacts to secure work for the following month is just as much a part of my job as completing the work I already have, and I hadn't done that while we were traveling.

So, when I got home ready to work and make back all the money I'd spent, my inbox was full of nothing but crickets. I had only a few assignments lined up for the upcoming month.

What's worse, my biggest client had put a project on hold indefinitely. Plus, the holidays were fast approaching, which is a time of year when it's notoriously difficult to find work due to waning budgets and editors being out of the office.

As luck would have it, my income didn't just take a hit for the month of October, which I'd intended. It took an even bigger hit in November and December when I made just 25% of what I'd been bringing in during prior months.

All of this was compounded by the fact that the holidays were coming up, a time of year during which I usually spend more, between traveling back to the United States to visit my family, catching up with friends and family over dinner, drinks, and holiday activities, and giving gifts.

I ended up drawing on my savings account a couple more times to pay bills and keep up with the holidays. By the end of the year, my balance was down from $30,000 to $22,000.

What I learned about the importance of emergency funds

I'm extremely lucky. Not only were none of these expenses dire emergencies, but if a crisis does occur, I still have a good amount of money on hand to cover it.

This experience taught me just how quickly a series of multiple unexpected expenses can drain your bank account, and also solidified my belief that $30,000 isn't too much for my emergency fund.

While all of this was financially stressful, I'm grateful that I had the money to cover everything without having to worry at all. I don't know what I would've done about my car if I didn't have an emergency fund, or how I would've paid for the remainder of my time in Europe. In fact, I probably wouldn't have gone to Europe for that long without my emergency fund for fear of going over budget.

That's an important thing that my emergency fund provides for me apart from covering emergencies: It allows me to take advantage of once-in-a-lifetime opportunities that might otherwise be too financially risky. I was able to enjoy my trip to Europe and the holidays with my family the way I wanted even when I went over budget and lost work.

I wouldn't recommend this if your emergency fund is only enough to cover six months of basic living expenses, but because mine is big enough to cover one year, it can double as an opportunity fund.

Now that my emergency fund is down, my focus is getting it back up to $30,000. Until then, I plan to only draw on it for true emergencies.