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3 Questions to Ask Yourself Before Using Your Emergency Fund

by Third Coast Bank SSB

Many people have found that keeping an emergency fund on-hand is one important element of successful personal financial management. An emergency fund, as the name implies, is a safety net of money that can be used when unexpected expenses come up, or other financial resources are depleted.

It can be tempting to dip into your emergency fund when you feel that there's a pressing need. But before you do, here are 3 important questions to ask yourself:

1. Is it unexpected?

In most cases, an emergency fund should be used for unexpected events or situations that arise. It should rarely be used for expected events. Why? Because expected things can be budgeted for — without stretching your funds to the breaking point.

Examples of unexpected occurrences may include:

  • The loss of a job
  • A pay cut at your current job, or a reduction in work hours
  • A car accident, perhaps one with expenses that your insurance won't completely cover
  • A major vehicle breakdown
  • An unanticipated illness, with associated medical bills

These are things that are usually impossible to predict — and they're exactly what an emergency fund is designed for! In contrast, you probably shouldn't tap into your emergency fund for things like:

  • Shopping
  • Basic car maintenance
  • Routine visits to the doctor


2. Is it necessary?

Second, you need to ask whether you really have to take out money from your emergency fund. You've no doubt worked hard to set aside money for your fund, so you should only withdraw some if it is absolutely necessary.

Of course, there are definitely situations that will require you to dip into your savings. For instance:

  • If your car breaks down and you need reliable transportation, you'll likely have to spend on repairs, buy, or rent a car
  • If your monthly power bill comes in $100 higher than normal, then you'll have to pay it to keep the lights on
  • If a sudden family crisis arises, you may have to use extra money for travel expenses, or because you'll need to take extra time off work

On the other hand, some things are wants rather than needs. For instance, there's nothing wrong with wanting a newer car, or a more advanced smartphone; but if your current car and phone are still working fine, then it would be better to budget for any upgrades rather than deplete your emergency fund.


3. Is it urgent?

Finally, is your contemplated purchase something that is urgent? Even some important items may not be time-sensitive, and can be fit into your regular budget. 

Of course, other things require immediate attention, such as:

  • A broken AC unit in the middle of a heat wave
  • A lost or stolen phone
  • A veterinary bill for your pet
  • A utility bill, like your energy or heating bill

In contrast, some things can wait for later; or perhaps you need to let the opportunity pass by without taking advantage of it. A good example is when your favorite store has a great sale. Even if it's a 20 or 25%-off sale, it's much better to wait and save up to buy the product you have your eye on rather than use your emergency money. 


There you have it: 3 important questions to ask yourself before dipping into your emergency fund. Saving for your emergency fund was a challenge to begin with, so do all that you can to keep from using it — and you'll be prepared for any real emergencies that come up in your life. 

If you'd like some more tips on how to build an emergency fund and what to use it for, reach out to our financial experts at Third Coast Bank today. Or start your personal financial management journey with us by opening an online account. We'd be happy to help!

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Third Coast Bank SSB

Third Coast Bank SSB

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