This Is the Most Common Reason I Tap My Emergency Fund

My emergency fund is something I've been building since I was a teenager. Granted, back then, my savings account balance was far less robust than it is today. But I've always known that it's important to have cash reserves to tap in case something goes wrong that requires you to spend money your normal paycheck can't cover.

I make a point to keep enough money in savings to cover about a year's worth of bills. Some people will say that's going overboard, but I have my reasons.

For one thing, I'm self-employed, so if my income were to decline or go away, I wouldn't have unemployment benefits to fall back on. I also have kids and a dog to care for, and sometimes, those kids and that dog run into medical issues that cost a small fortune. Case in point: My daughter recently broke a bone and the result was an $850 medical bill. 

But while my emergency fund is technically designed to do everything from get me through a period of unemployment to cover medical costs as they arise, my most common reason for tapping it over the past 15 years has been none other than home repairs. And if you're buying a home, I highly suggest that you pad your emergency fund, because chances are, you're going to need that money.

An expense I can't avoid

Despite having a fairly new house, my husband and I have run into a host of issues, specifically over the past five years or so as our home has started to age. During that period, we've had to replace not one, but two air conditioning systems. We've also had to replace a water heater and replace the top of our deck after the wood started to rot. These costs alone amounted to somewhere in the ballpark of $20,000, or maybe more. 

And those were just the big-ticket items. We've also had smaller repairs to tackle, like having to repair a burst pipe in the basement several times over and having to repair parts of our sprinkler system that keep getting damaged. 

For some of those repairs, we didn't need to raid our emergency fund. But for a few that weren't horrendously expensive but also weren't just $100 or $200, we did.

And that's why I'm grateful for having saved that money. If it weren't for my emergency fund, I would've been looking at a massive pile of credit card debt.

Make sure you're prepared

It's important to have a fully loaded emergency fund whether you own a home or not. But if you do have a home you're responsible for maintaining and repairing, then it's especially important to have cash reserves you can tap in a pinch.

Homeowners spent almost $6,000 on home repairs and maintenance on average in 2022, according to Hippo. And if your home is older or if big issues arise, you might easily end up spending more than that in a single year. So make sure you have an emergency fund to bail you out when things inevitably go wrong in one shape or form.

At a minimum, everyone should have an emergency fund without cash to cover three full months of essential bills. But if you own a home, I suggest doubling that, or otherwise creating a separate home repair emergency fund and stashing at least $5,000 in it to start with. Granted, you might encounter a single repair that's more than $5,000, but it's a decent starting point to work with.