One of the best gifts I’ve ever received was my college graduation gift from my grandparents: a 2009 Kia. It was all mine, and I was thrilled to enter the adult world with a car of my own.
In a little twist of irony, it was on my way home from lunch with my grandmother four months after she had given me my car that I got into an accident. I’m not proud to say it, but I was distracted by some news she had told me, and I ran a red light.
I smashed my Kia into a SUV driven by a 72-year-old woman. Thankfully, neither one of us was hurt. We walked away from the crash completely fine. But our cars were a different story.
I was 23 and had no idea what getting into an accident meant for my finances or how the accident would ripple outwards into the rest of my life.
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Accidents happen to everyone, but the effects they have on our lives can vary hugely.
These are the financial lessons that I learned from my car accident trauma:
Emergency Funds and Insurance Exist Because of Accidents
I had my accident before I had my personal finance awakening. I was working as a waitress, living at home, and saving to move across the country.
After my grandparents gifted me the car, my mother brought me to her insurance company and got me set up with car insurance for the year. I dutifully paid each month on my waitress salary, even though I resented the drain on my income.
Later, when the accident happened, I was head-over-heels thankful for my insurance. The accident totaled my car. The front looked like an accordion. That insurance that I resented paying each month saved my financial butt. Instead of paying thousands for all the repairs my car needed out of pocket, I paid a $500 deductible.
Since I was only five months out of college and hadn’t discovered the wise world of personal finance blogs yet, I didn’t have a dedicated emergency fund. I did have a savings account that I tucked money into whenever I could. My deductible came from that account. I also had to pay $200 for a tow truck to move my car to a repair shop. This helped reduce my car accident trauma immensely.
I was thankful that it was a mere $500, but I also wish that I’d had an emergency fund. Emergency funds exist for situations exactly like this, when an unexpected cost crops up that you need to pay immediately.
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The Emotional Trauma After a Car Accident
While I could absorb the financial cost of my accident, I was completely unprepared for the emotional impact. I ran a red light, which meant that I was at fault for the accident. The fallout just kept coming.
Like I said, I totaled my car, which left me without an easy way to get to work each morning. For the first time, I found myself in a situation that required real, adult skills, and I felt unprepared. I had to deal with my ticket, my insurance company, the insurance company of the woman I’d hit, and still get on with my day-to-day life.
I’d gotten into the accident less than a mile from my house. About 15 minutes after I arrived home, a police woman showed up at my door to issue me a $50 ticket for running the red light. I was shocked – I just had a traumatic experience, and I was already being ticketed?
The accident really was a small trauma. I’d come very close to hurting or killing not only myself, but another person, as well. I felt scared. I remember getting back behind the wheel of a car for the first since after the accident and feeling unsure of my abilities.
The Lessons I Learned From My Car Accident Trauma
It took a few weeks, but I eventually sorted everything out – from the insurance and repairs to getting my driving confidence back.
I managed to put my car and my life back together, and I walked away with invaluable insight into managing my money and my emotions. Getting over a car accident can be an awakening experience, too.
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Today, I keep eight months’ worth of living expenses in an emergency fund, and my car insurance now includes rental. In other words, if I get into another accident, I can use insurance to pay for a rental car.
I'm also more careful – I don’t drive when I’m upset. My experience taught me that driving when emotional can be just as distracting as driving drunk.
My accident also helped me see that paying for insurance pays back when you need it the most. And this is true in other situations, too – whether you want to protect the contents of the apartment you rent or you live in a floodplain where you could get washed out.
Always take care of yourself by having dedicated savings and protection for the things you care about.
