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When to Use Your Emergency Fund

Good reasons to use your emergency fund

You know how tough it can be to save. After all the dedication and commitment, you may find that you’re hesitant to use your emergency fund. And who could blame you? But, it’s there for a reason. Your emergency fund is how you anticipate life’s little surprises. It’s your first line of defense to avoid taking on additional debt.
Before dipping into your fund, ask yourself this simple question: “Is this an emergency?” Emergencies are unexpected and present a necessary need — a need, not a want. Shopping, home décor, optional electronic upgrades, holidays, vacations, and coffee shop coffees are not emergencies. What’s more, someone else’s emergency is not your emergency. Help if you can, but keep your emergency fund for your emergencies.
So, when is it okay to use your fund? Here are some good reasons:

Job loss

Hopefully, unemployment compensation and a side gig can cover some, or all, of your living expenses while you’re hunting for a new job. If these options aren’t enough, now’s the time to draw from your emergency fund. Take a long, hard look at what expenses you can cut, adjust your budget, and use withdrawals from your emergency fund to supplement your new lower income. Calculate how many “paychecks” your fund can support and save whenever you can to make your savings last longer.

Necessary car, home, or appliance repairs or replacements  

Again, if you can cover the cost of a repair without borrowing from your emergency fund, do so. Check out some “how to” videos on YouTube. You might find that you can replace your toilet fill valve, or even replace the heating element in your stove. A leaking pipe that’s spraying water everywhere or a flat tire that requires the purchase of two new ones? Hit the emergency fund.

Unexpected medical expenses 

Accidents happen. Use your emergency fund for the emergency room. Ask about a payment plan first, though. You may be able to arrange manageable, interest-free payments without using your emergency money. If you or a loved one needs to take a new medication regularly, your emergency fund can offset this expense without altering your existing budget.

Unexpected travel expenses 

Deciding to have lunch in Paris on Thursday doesn’t count. All joking aside, there are times when you simply need to be there to help a friend or family member. If a situation occurs, such as helping a new parent’s return home, an illness or recovery, a death, or preparing for a move, your emergency fund can help you help them.

Rebuilding your emergency fund

When you do use money from your emergency fund, you are borrowing from yourself. Aim to rebuild your fund as soon as possible, so it’s available if you need it again. Ultimately, an emergency fund should contain 6 to 12 months of living expenses. Start small and do what you can. Just $500 can take a good edge off an unexpected car repair. Here are some tips to help you start saving for your emergency fund now.
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