Five Good Reasons to Dip Into Your Emergency Fund

 Hopefully you have a fund containing enough to cover your regular living expenses for at least three months. Such emergency funds have never been more important than now. If you haven’t yet been forced to dip into that account, you’re probably one of those contemplating it after a layoff or as the bills get harder to pay every month. At what point is your situation an emergency? When should you throw in the towel and accept that you need to use some of that emergency money you have been stashing away?

Good Reasons to Use the Emergency Fund

Unemployment funds will either run out or become inadequate for your needs. Sometimes you cannot get the budget to stretch far enough no matter how much you cut expenses. When that happens, you need to take as little as you can from your emergency account to get by for as long as you can until you get the job you have been stalking or finally find a way to reduce expenses or increase your income.

Medical emergencies can be a good reason to dip into the fund, especially if you lost health benefits when you lost your job, if you never had them in the first place, or if you simply cannot afford to keep benefits you had. Be wise with how you dole out the money for these expenses. Work out interest free payment plans whenever possible. Try to get the bill reduced to what the hospital would be paid if insurance had covered the bill. Do whatever you can to make that money last, even though you had to dip into the emergency stash. 

If your car breaks down, you’ve got a very good reason to dig into the fund. Whether you decide to fix or replace needs to be calculated carefully. Try to look beyond emotional attachments to the car, or the money for that matter, and make a sound financial decision. If you can buy a simple, no frills car that will get you where you need to go more cheaply than fixing the car, then do it. You can’t make money if you have no way to get to work, can you?

Unexpected litigation costs are one of the most upsetting reasons to need an emergency fund. You may need to pay for legal defense, or you might have to go after someone who has wronged you financially. It’s bad enough to be dealing with the courts and now you’ll have to dip into your emergency savings too. But court costs are definitely a legitimate reason to dip into the fund.

When a family member passes, there are many costs that need to be covered right away. Unfortunately, most funeral homes will not wait until you can save up the money needed. You must pay before you can hold a service for your loved one. Funds can be replenished after the emergency is over, as long as you stick to diligent habits. 

There are also some times when you should definitely avoid dipping into the emergency fund. Some examples of these can include:

Opportunity knocks: A friend has a great opportunity for you to make money. Should you dip into savings to buy into it? Best not to put in what you can’t afford to lose. An emergency fund is essential. Don’t spend your safety net on a dangerous endeavor. 

College Education for Your Child: While this is an important expense, it’s not an emergency. Your child will have many avenues to pursue for college loans through the government and through the school he attends. Let him find his own path with the help of your wisdom rather than your dollars. 

Regular expenses: You should not be going into the fund just to stretch your money from one week’s expenses to the next. Instead, focus your energy on reducing expenses until they fall within your budget. 

There are very few reasons you would need to use your emergency money. Make sure you have no other options available before you make use of this vital resource.