How to Know When to Spend Your Emergency Fund

We’ve already discussed why you should have an emergency fund and how to build one on a tight budget, but then what?

When are you justified to spend it?

The answer isn’t as complicated as you might think. You just need to take the time to think through your options, which is something so many of us forget to do when hit with an “emergency.”

Here’s a few handy questions I ask myself before making a withdrawal from my emergency account.

Is this actually an emergency?

I hate to get all Merriam-Webster here, but it’s important to define this: an emergency poses immediate risk to health, life, property, or environment.

You may need to buy your significant other an anniversary gift by tomorrow, but as much as it feels like an emergency, there’s no real risk to health, life, property, or environment.  I’m sure there’s a risk to your relationship, but you can always opt to give them a homemade gift instead.

It’s also worth noting that an emergency is immediate and has a sense of urgency, so only tap your savings if there’s no time to find a better solution.  If it can wait until your next paycheck, you should probably wait.

Are there other payment options?

Perhaps you just need to raid your vacation fund instead. Perhaps you could put it on your credit card and pay it off in full at the end of the month. Don’t risk adding a high-interest balance to your credit card, but don’t use your emergency fund without looking for alternatives either.

And sometimes the alternative is to not do anything at all.  Ask yourself if the consequence of forgoing this need will outweigh the benefit of keeping your emergency fund intact.

It might be worth skipping a car repair if you can find another ride to work, especially if you think you might have some big expenses coming up in the near future.

Is there a financial benefit to using the emergency fund?

There are times where using your emergency fund can help you financially even though it’s not a definable emergency.

For example, if you need new tires, you could wait a week for your next paycheck, but the financial risk of wrecking your car makes it more worthwhile to go ahead and spend your emergency fund on the tires. Just make sure you replenish your savings when that paycheck comes in.

There are also times where you have other payment options, but you shouldn’t use them.  An example might be if you need to get a dental crown, you could choose to put it on your high-interest credit card and then pay it off over the next six months. But in this case, you’d be better off financially if you used your emergency fund and then made payments (with added interest) back into it over the next six months.

And that’s the whole purpose of an emergency fund; it preserves your finances when the unexpected happens.


Adam Lucas holds a Finance degree and an MBA from the University of Kentucky. His work has appeared in many major outlets including and