Published in: Banks | July 15, 2019

4 Things You Should Never Use Your Emergency Fund For

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Your emergency savings should be earmarked for unplanned expenses -- and nothing more.

Cash in emergency savings jarImage source: Getty Images

There’s a reason you should maintain a fairly robust savings account: You never know when life might have an expensive surprise in store.

It could be your roof collapsing, your car refusing to start, or an injury that leaves you with a pile of medical bills. Without an emergency fund, you risk racking up loads of debt when unplanned expenses pop up out of nowhere.

Ideally, your emergency fund should contain enough money to cover three to six months of essential living costs. If you’re sitting on that much cash, congratulations. You’ve done a great job of saving.

That said, it can be tempting to tap your emergency fund when you struggle to pay for other expenses. Here are a few things you might think you should use your emergency savings for -- but you shouldn’t.

1. Your summer vacation

It’s nice to get away during the summer when scheduling is more flexible and there are more warm-weather destinations to choose from. But if you don’t have the money on hand to pay for your summer getaway, your emergency fund isn’t the place to find it.

The reason? A summer vacation is hardly an emergency. It’s a luxury. You can swing it by cutting back on other expenses in the months leading up to it or working a side gig to generate extra cash.

If you can’t come up with the funds to take an expensive trip this summer, you can explore some low-cost vacation ideas that won’t leave you scrambling for money.

2. The holidays

The holidays are an unquestionably expensive time of year. You might pay for gifts, travel, hosting and attending parties, and other things. While they put a strain on your budget, you shouldn’t compensate by tapping your emergency fund.

Remember, your emergency fund should be earmarked for unplanned expenses. Holidays are predictable in that you know when they’ll be coming year after year. As such, you can reduce your spending to save up for them or work the side gig we just talked about. With some forethought, you’ll be able to cover your costs without resorting to debt.

3. Routine home or vehicle maintenance

There’s nothing wrong with raiding your emergency fund to cover unplanned damage to your vehicle or a busted pipe or air conditioner in your home. But you shouldn’t touch that money to pay for routine home and vehicle maintenance. Things like gutter cleanings, pest control services, oil changes, and alignments aren’t emergencies.

These are predictable expenses you should factor into your monthly budget. You may have to reduce your spending in other categories (think cable or your gym membership) to ensure that you have the money on hand to cover them as they arise.

4. Once-a-year expenses

Many of us have annual expenses that catch us off-guard if we’re not careful. For example, some people pay their life insurance premiums once a year. Others pay an annual fee for subscription renewals, roadside assistance, and professional licenses.

You shouldn’t be getting the money for these expenses from your emergency fund. Again, they’re predictable.

Granted, you might forget about these bills since they don’t come up that often, but a healthy round of calendar reminders can remedy that. At the same time, you can factor these once-a-year expenses into your budget so that when they come due, you’ll have money available.

For example, if you pay your $1,500 life insurance premium once a year, set aside $125 a month in your budget so you have that money on hand when you need it.

Emergency funds are for emergencies

The purpose of an emergency fund is to pay for -- you guessed it -- emergencies. The above expenses are not emergencies: They’re predictable, unnecessary, or both.

Instead of dipping into your emergency fund, plan for these regular expenses. With a smart savings plan, you’ll be able to pay for them without using your emergency fund.

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