3 Bad Reasons to Raid Your Emergency Fund

Sorry, but you may want to leave that money alone.

A recent SecureSave survey found that 67% of Americans don't have the cash reserves to cover an unplanned $400 expense. So if you're someone who actually has an emergency fund, good for you! And if you have enough money in your savings account to cover at least three full months of essential expenses, even better.

Now, there may come a point when you have to tap your emergency fund. If you lose your job, you might need that money to cover your bills while you look for work. And if your car breaks down or your refrigerator stops working, you may need to dip into your savings to cover repairs or buy a replacement.

But you may reach a point where you're tempted to raid your emergency fund for the wrong reasons. Here are a few situations where you should not tap your cash reserves.

1. You've bought a new home and want to renovate

It's somewhat uncommon to buy a home that's in perfect shape, needing no work whatsoever. Chances are, once you move in, you'll want to renovate to some degree, whether by replacing worn carpets, adding storage space, or swapping out your kitchen countertops and cabinets for something more modern.

These are all perfectly acceptable things to spend money on -- just not your emergency fund. And the reason is that these items are not emergencies. They're all items that can wait until you've saved the money to cover the costs at hand. 

You may not love coming home to a bedroom with carpet that's seen better days. But as long as it's not unsanitary, you're better off saving for a few months and then swapping that carpet out.

2. You desperately need a vacation

When you work hard day after day, you can easily reach a point where you're desperate for a break from the grind. But if you can't afford to pay for a vacation outright, don't take one. And certainly don't raid your emergency fund to pay for one. 

If you need a break from work, take a stay-cation, or drive to visit a friend in another city where you'll have access to free lodging and a kitchen you can cook in so you don't have to dine out multiple times. You deserve to pull yourself away from the job, but escaping to an island doesn't constitute an emergency. 

3. Your bills are costing more due to inflation, and you don't want to cut back

Many people have been forced to dip into their savings to cope with inflation. If that's the boat you're in after having eliminated non-essential expenses, then it's totally understandable. But before you tap your emergency savings due to inflation, first assess your spending and see if there are costs you can cut.

Let's say you currently pay for three streaming services and order takeout two nights a week. Those purchases might enhance your life, but if you can't afford them right now, you should cut back before raiding your emergency cash reserves. That could mean limiting yourself to a single source of streaming content only, and pledging to cook all meals at home until your financial situation improves.

If you actually have an emergency fund, you should be proud of yourself for having made that effort. But you don't want to let that effort go to waste. Resist the urge to tap your emergency savings for situations that aren't emergencies. And reserve that money for a period of unemployment or for things like home repairs, car repairs, and medical treatment that can't be delayed.