It’s taken you months, saving in ways you didn’t even know possible, and lots of hard work to build your emergency fund.
Now you need to use it, and taking that money out is making you nervous.
So before you break open the piggy bank (or head to the bank to make a withdrawal) let me ask you–do you really need to touch that fund?
Sometimes the answer is yes, there’s no way around it. If you’ve got a major emergency, such as a trip to the ER, a huge hole in your roof, or something of the sort, then there’s probably no way around using your emergency fund.
If that’s the case, congratulations on having that account built up for when you need it! I know it will be hard, but this is what you’ve been saving for all along. Just imagine if this disaster had struck and you hadn’t saved this money up–what would happen? Would you dig yourself into even more debt? Put the house up for sale?
There are other situations that may seem like emergencies, but once you step back and really examine the situation, there’s ways around using your fund. Ask yourself these questions before using your savings account:
1.) Can I Find A Cheaper Solution?
One example may be car repairs. Your car is making a funny noise, so you take it to the mechanic to get it checked out. After waiting for an hour, the mechanic comes up to you with bad news–you need to replace the engine, radiator, transmission, and maybe the radio too. You know this won’t be cheap, and start to think about heading to the bank–after all, you need a car to get to work and take the kids to school.
But before you give the mechanic your hard earned cash, always get a second opinion. Chances are, if you were able to drive to the shop, you can drive it to another one down the road. Get recommendations from family or friends about where they take their vehicles. The next mechanic you stop at may be able to give you a much less expensive option and get you back on the road faster.
2.) Is This an Immediate Need?
Oftentimes something feels like an emergency because we get caught up in the moment and make hasty decisions. If you can afford to give yourself time to think about something, do it. What may seem scary and impossible now could look totally different in the morning.
For example, maybe you forgot about a bill you have to pay this month, and you don’t have room for it in the budget. Before you transfer any money from your savings, call the bank or company and ask them if there are any options you have. If this is the first time this has happened, they’ll likely be willing to work with you and may waive any fees or change your due date to later on in the month. Asking politely can sometimes do more for you than you realize.
3.) Can I find (or Make) the Money Somewhere Else?
Before going anywhere near your emergency fund, you should think about any other options you have first.
- Do you have any wiggle room in your budget you could use? Could you cut back on eating out this month in order to put out this fire?
- Is there anything you could sell to come up with the cash quick? That tablet that hardly ever gets touched, the fancy leather jacket you only wear twice a year?
Once you give yourself time to think, you might find out there are better options than using your emergency fund.
Facing an emergency can be scary in many ways. Don’t let your bank account become another source of anxiety. Ask yourself a few questions before draining your emergency fund. Can you find a cheaper solution? Is this something you have to take care of right now? Can you get the money from some other source?
Have you ever faced an emergency, and your fund lived to tell the tale? Share your story in the comments!