When Should I Use My Emergency Savings Fund?

If you have an emergency fund, you have put yourself in a more stable financial position. But have you been tempted to get some cash for future plans, like a concert or a trip? If so, I’m sorry to break it to you, but that’s not what your emergency fund is for. Here’s what it should be used for:

Vehicle Break Downs

Oil changes, new tires, and other routine vehicle maintenance are expected. So your emergency money shouldn’t be used for it. But, if your car unexpectedly breaks down and you need to get it towed and fixed, that’s what it’s for. Or if you get into an accident, your savings could be used to pay your deductible or other related costs.

Emergency Medical/Vet Bills

Just like routine maintenance for your car, routine healthcare (including pets!) should be planned for. Use emergency funds for ER bills or emergency veterinary care.

Unexpected Home/Appliance Repairs

We all know that appliances get old and need to be replaced…and that’s something you need to start saving for when you determine your washer is getting old. However, if your pipes burst or you have other unexpected issues in your home, that’s another great use of your emergency savings.

Injury, Job Loss, or Income Reduction

This one right here is the main reason you want to build up your emergency fund with at least 3 months’ worth of your expenses. Because no one can predict the future and income isn’t usually guaranteed. Build up savings so that if you are faced with an unexpected income loss, you will have a cash safety net available.

There are many more situations that the use of your emergency cash stash would be appropriate so I’m not going to list them all. Just remember that if it’s something you should be planning for, do it and start saving up.

Reserve your emergency fund strictly for necessary unexpected expenses.


Author Elaina Johannessen is a Program Director with LSS Financial Counseling.