When Should You Use Your Emergency Fund?

When Should You Use Your Emergency Fund?

When Should You Use Your Emergency Fund? | brokeGIRLrich

Emergency funds are awesome! I can honestly say that how well I sleep at night is effected by the balance in that account. I got it up to $2,000 pretty quickly in my early 20’s but hitting the goal of $5,000 took some time – partially because of paying off debt and partially because of raiding it.

But how do you decide it’s ok to raid your emergency fund?

Things I have raided my emergency fund for:

  • Tuition Payment (bad idea)
  • Relocation for a New Job
  • Physicals to Start a New Job
  • Car Insurance Payments (not recently, but it’s been known to happen)

I’m still not sure touching it for tuition was the best idea, mostly because I completely drained the sucker. I think if it were the difference between staying in school and dropping out AND it didn’t completely drain an account, it’s a valid reason – the problem is that there will always be another tuition payment, and what’s the plan then?

I’m a huge fan of emergency funds providing you freedom and the main thing I tap mine for is opportunity. When I decided I was going to take a much more lucrative job in New York City, I still had to pay to get there and find a place to live. Tapping my emergency fund made that whole situation possible.

Back when my emergency fund was much smaller, it allowed me to pay a few hundred dollars for the intense, insane physicals that are required to go work on a cruise ship. Since I had $400 accessible to me when I needed it, I was able to take advantage of a job opportunity that wound up letting me save thousands.

Other things I would be willing to tap my emergency fund for:

  • Car Insurance Deductibles
  • Health Insurance Deductibles
  • Car Repairs
  • A New Computer (if mine died suddenly and I had no plan)
  • Travel Expenses for a Family Emergency

I would also be comfortable using it to cover living expenses if I lost my job.

How do you plan for these emergencies though? 

Well, personally, my overall goal for my emergency fund is $10,000. I think this might be a little higher than the average single person needs to aim for, but I feel like if you work in the arts, you should plan for at least six months of unemployment expenses AND any health, car, home insurance deductible amounts too.

However, I can say that at a little over $5,000, I’m not losing any sleep at night, especially considering how low my expenses are lately. Interestingly enough, while living in NYC, $5,000 didn’t feel that comfortable to me and if I’d planned on staying there, I suspect my overall goal might be even higher than $10,000.

Additionally, you can plan for emergencies that you know will arise with a different account. For instance, I’m pretty certain that both my laptop and my phone are on their last legs. So I’ve started saving a little bit each month specifically to replace them.

I’ve researched the estimated life span of Toyotas and also have started a savings account to add a little each month for when I’m likely to need a new car… which is hopefully about 7 years from now.

How do you decide how much to keep in your emergency savings?

18 thoughts on “When Should You Use Your Emergency Fund?

  1. I think for me it’s car repairs, moves, medical emergencies, computer (anything I can’t draw on other funds for), and job loss. Because my career is still fairly precarious, I’d also like $10,000, but right now I’m just aiming for $5000, which I should hit by the end of the summer if everything goes smoothly. I really don’t want to have to use it to cover other stuff, so I’m trying to build up other kinds of savings I can tap first.
    C@thesingledollar recently posted…Zero Food Waste 2015, Week 6: Don’t Be Penny-WiseMy Profile

  2. Right now my goal is to have $5000 in my emergency fund. However, I don’t want to be using for certain things that I know will come up, like eventually replacing my computer. However, because I’m in full on debt repayment mode, it is hard (because I’d rather pay off debt, not that I don’t have money to) to set aside a small amount to save for a new computer, so I’m thinking of opening a digit account to be my “new computer” fund.
    Liz recently posted…I’m Credit Card Debt Free!!!My Profile

  3. One of my biggest financial mistakes was not having an emergency fund before buying my first car. I didn’t have the money to pay for maintenance or repairs. Every visit to the repair shop went on my credit card. It took me years to pay it off. Now we probably have too much money in our emergency fund, but with DH retired and not collecting social security until next year we need it. I used it when my 2 year old computer crashed last year (warranty had just ended). I had to take the money out of our emergency fund… and just so you know it still hurts.

  4. I dipped in to my emergency fund a little bit recently for a tuition payment. I had almost all of it saved up, but needed a last little bit to complete it. And this only happened because I didn’t give myself enough time to save up. For the Fall payment, I’ll be ready! :)
    Chela @SmashOdyssey recently posted…Time Travel and Free FunMy Profile

  5. Our emergency fund fluctuates from 5-10k as well. We dip into it for things like snow tires and computer parts. It’s nice to know that we have some flexibility if a big expense comes up without a lot of time to set money aside for it every pay check.

  6. Taking any money from the emergency fund is always a topic that has to be thoroughly discussed before taking any sort of action. My fund usually takes a hit when it comes to car repairs or school time but I definitely like your guide on when it is okay and when it isnt to use the fund! Thanks for sharing!

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