You’ve spent time building an emergency fund. But what constitutes an emergency?
It can take months or even years to build up a healthy emergency savings account. Spending it can feel like a blow to your hard work.
But there are times that an emergency fund is exactly what you need to use. Using your savings instead of your credit card or a loan can keep you financial stable.

Not for the Predictable

An emergency fund shouldn’t be used for predictable expenses. Birthdays roll around at the same time every year. So do things like insurance renewals and membership fees. You may forget about them, but they’re not emergencies.
You should build recurring items into your budget, even if they only happen once per year.
Similarly, routine car maintenance isn’t an emergency either. Your tires wear down, and regular checkups are bound to find things that need fixing. Create a budget that accommodates these things instead of using your emergency fund.

Unexpected Expenses

An emergency fund is best used to pay for the unexpected. This includes your or your spouse losing their job or a sudden reduction in hours.
Your emergency fund is designed to cover three to six months of income for a reason. If you lose your job, you need to be able to pay your bills while you job hunt.
You may also get in a car accident or a natural disaster could take out a power line behind your house.

Medical expenses outside of routine visits also fall into the emergency category.

Plumber working on a faucet in the kitchen.

Wants and Needs

Knowing the difference between wants and needs is important. Wanting to go on vacation is different than flying to see a loved one who needs help.
Your emergency fund should only cover needs. If you use your emergency fund for wants, you’ll be in a tough spot when a real emergency comes up.
Needs include making sure you have a dependable car to get to and from work or replacing a leaky roof after a big storm.
Upgrading your laptop or your vehicle isn’t something you need to do.
Macbook Pro on a wooden table.

Should You Pay for It Right Now?

In addition to figuring out if you’re paying for a need or want, you also need to know if it’s urgent. Some things need to be taken care of right away, while others can wait.
Your emergency may be in the way of getting to work on time. It’s something you need to pay for right away.
But if you find a great deal on a washer and dryer to replace yours, it may not be time-sensitive. A good deal is tempting. But it’s something you should build into your budget to replace and not impulse buy.
Deciding to use your emergency fund shouldn’t be taken lightly. It takes a long time to build up enough money to stay safe in an emergency. So knowing when the right times to use it is important.
If you find yourself in a real emergency, don’t sweat! You’ve build a fund to protect you.
Have you ever had to use your emergency fund?
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