3 Emergency Fund Mistakes You Can't Afford to Make

You'll often hear that it's really important to have an emergency fund at all times. A recent SecureSave survey, however, found that 67% of Americans don't have a robust enough emergency fund to cover an unplanned $400 expense.

If you have a decent chunk of money sitting in your savings account, good for you. Building an emergency fund is not an easy thing to do, especially when you're juggling a host of bills, from mortgage payments to groceries. But now that you have that emergency fund, it's important to manage it wisely. And that means avoiding these three pitfalls.

1. Not saving enough

Some people put a random amount of money into their emergency funds and think they're set. So let's say you've managed to save up $10,000. You might assume you're in great shape, since that's a lot of money.

But one thing you should realize is that your emergency fund needs to be based on your personal spending. And it should contain enough money to cover at least three full months' worth of essential expenses.

The logic there is that if you were to lose your job, it could easily take three months to get hired elsewhere. And having a three-month emergency fund could be your ticket to avoiding debt.

If you're sitting on $10,000 in savings, you ought to be proud of yourself for accumulating that much cash. But if you typically spend $5,000 a month on essential bills, then a $10,000 emergency fund is shy of where you would ideally want to be. And so in that case, you should do your best to boost your cash reserves as much as you can to reach that three-month mark.

2. Taking withdrawals for non-essential bills

Your emergency fund isn't just there to get you through a period of unemployment. It's also money you can tap when an unplanned bill arises that you can't put off, like having to fix an issue with your car.

But while it's definitely okay to raid your emergency fund for things like home and auto repairs, you don't want to touch that money for things like a last-minute concert invite or weekend getaway. If you don't have an opportunity to save for those things in advance because they're presented to you at the last minute, pass on them. You shouldn't be tapping your emergency fund for non-emergencies, because if you do, you might end up short on money when a more serious situation arises.

3. Not replenishing your cash reserves after taking withdrawals

The whole purpose of having an emergency fund is to be able to dip in when unexpected expenses pop up. But don't just take withdrawals from your savings and leave it at that. Rather, aim to replenish your withdrawals as you go to ensure that you have enough money in that account when you need it.

This isn't to say that if you take a $400 withdrawal to pay for a car repair today, that you're expected to have that money put back within a week. It might take several weeks or months to replenish a withdrawal of that size. The key is to do your best to get that money back into your account as soon as you reasonably can.

It's a great and important thing to have an emergency fund, but do your best to avoid these blunders. That way, you can truly get the peace of mind you deserve.