4 Questions to Ask Before Using Your Emergency Fund

Quick Answer

Emergency funds shouldn’t be overly relied on, but they’re there for a reason—especially if the alternative is going into debt. If you’re uncertain whether an expense warrants tapping into your emergency fund, ask yourself these questions.

Woman looking worried while considering using her emergency savings fund, looking at paper bills and laptop

Most people grow up being told they need to save for their future. But as you get older, you learn that it goes beyond just setting money aside—you need different saving strategies for various parts of life.

One of the key savings accounts to have is an emergency fund that you tap into only when you have urgent or hefty unexpected expenses you can't pay for otherwise. Building up this savings account—and leaving it intact unless truly needed—helps you avoid going into debt during a crisis like emergency medical or vet bills, a broken-down car, a family emergency or a job loss.

Once you've worked hard to build your emergency fund, it can be challenging to decide when a situation is worthy of pulling money out. Before you tap into your emergency fund for an expense, ask yourself these four questions to make sure it's worth it.

1. Is There a Better Way to Pay?

If you find yourself faced with an unexpected expense, don't automatically assume it's best to use your emergency fund. Generally, you want to leave your emergency fund alone unless you have no other way to pay without going into debt.

Before you dip into savings, it's important to consider if there's another way to pay that will leave your precious emergency savings intact. For example:

  • Do you have any other savings accounts you can pull from that aren't set aside for emergencies only?
  • If you're not in a time crunch, could you wait and save up for the expense over the coming weeks or months instead?
  • Could you put it on a credit card, then pay it off when you get your next paycheck before you owe interest?
  • Could you put it on a new credit card with an intro 0% interest rate and pay it off before the regular annual percentage rate (APR) kicks in?
  • Do you have any windfall money coming that you could wait for, like from a tax refund, birthday or investment dividend—or that you can use to replenish the emergency fund later if you have to pull from it?
  • Could you borrow money from a relative or friend?

If there's not a better way to pay, and avoiding the emergency fund means taking out high-interest debt, then it could be the right time to use this money. After all, it's there for unexpected bills. Just ensure you're not depleting your precious savings—and potentially leaving yourself in a future bind—if you have a better way to cover it.

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2. Is This Purchase Necessary?

As the name suggests, an emergency fund is truly meant to be used only for financial emergencies like a sudden loss of income or major unplanned expenses like a surprise medical bill. If you get in the habit of tapping into this fund for routine expenses or discretionary spending, it could lead to spending beyond your means—and leaving you unprepared in a crisis.

Before you take money out of your emergency fund, pause to ponder these two points about the necessity and urgency:

  • Is this something you absolutely must purchase? If it's a car repair that's needed to get to work, the answer might be yes. If it's a new car purchase based more on a want than a need, perhaps not.
  • Is it something you need right now? If your beloved pet is ill and needs emergency surgery, it can't wait and may necessitate dipping into your emergency fund. If it's something you want or need but not urgently—say your garage door needs replacing but can wait a few months—consider if it's possible to instead save for this expense separately.

3. Do I Need This More for Something Else?

Another factor to consider is if it's possible you might need this money for a different purpose in the future. For example, perhaps you work in an industry susceptible to layoffs, and your emergency fund is in place to cover living expenses should you lose your job.

It takes time to build or rebuild an emergency fund. When an expense pops up and you consider pulling money from yours, think about what types of future expenses you might have. If your car has been on the outs lately, or an elderly pet is starting to have health issues, you may have other big expenses on the horizon that you'll need this money for.

If you have no other foreseeable expenses, it could be worth the risk of using it now. Just be aware that it's called an emergency fund for a reason: You can't usually predict the curveballs life will throw your way.

4. How Much Will Be Left Over?

You can also assess how much of your existing emergency fund this expense will use up, and how much will be left behind. If pulling from your fund for a single bill still leaves a significant amount of savings for future emergencies, then it could be a safe move.

If using your emergency fund in this situation will totally deplete your savings, or leave you with very little, it's worth a more critical consideration of whether it's the right move.

While there's no hard and fast rule on how much you should have in your emergency fund, keep in mind that most experts recommend having three to six months of living expenses in there. This includes the cost of rent or mortgage payments, along with any other loan payments, bills and groceries.

Be Careful With Credit

As you weigh how to handle this expense, make sure you're not relying on a credit card as an emergency fund. This can be a recipe for debt and overspending and could eventually harm your credit.

If you do find yourself in a bind without enough savings, one option is to apply for and use an intro 0% APR credit card with Experian CreditMatch™. These cards give you interest-free introductory periods, typically anywhere from 12 to 21 months. You can put a purchase on one of these cards and carry a balance without paying interest. Just be sure you have a plan to pay off the balance before the end of that period so you aren't paying a potentially high interest rate.

Using your emergency fund may be the best strategy in some circumstances, but it helps to be prepared for the next best options.