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Dear Dave,

My husband recently opened his own commercial painting company. We know he will have three months or so every year when he’s making very little, if any, income. We also started following your plan recently, too, and have $1,000 set aside for our starter emergency fund. We were ready to begin paying off all our debt except our home in Baby Step 2, but now he wants to skip that, and move to Baby Step 3 to build a fully funded emergency fund of three to six months of expenses. I think I know why he feels this way, but would you give me your thoughts?

— Crystal

Dear Crystal,

Your husband’s excited about the new business. I get that. And in his own way, it sounds like he’s trying to make sure there’s extra money on hand for the down months he may experience as a commercial painter. But I wouldn’t advise this approach, not for his business, and not for your family’s finances.

Baby Step 3 is an emergency fund of three to six months of expenses. The scenario he wants to plan for, however, isn’t an emergency. He knows it’s coming. It’s the same with things like Christmas, birthdays and stuff like that. You know they’re coming, and you even know which months and days. Things like that aren’t emergencies, and they don’t catch anyone by surprise. They’re things you plan for—and budget for—ahead of time.

But the first thing your husband needs to do is re-work his business model. He needs something to do during the down months, so that his income doesn’t dry up completely. Setting money aside in a business for an expected down time is smart, but it’s not a Baby Step 3 issue. It would be a line in the budget where you set money aside because you know something’s coming.

Again, if it’s something predictable, something that happens at the same time every year, it is not an emergency. If you want to budget some household money for the down time, that’s fine. But do you know what would be even smarter? Figuring out a plan for this time, based on his skill set, which will allow him to keep earning money!

— Dave