Raiding the Emergency Fund – The Road Back

Good morning readers! It’s been nearly a month since I’ve written an article, and today I’d like to talk about the use of the emergency fund. There will be a time where you will have to use it—for me, it was definitely this past month through back surgery. We want to address the question of what to do when you have to use your fund.

To review, remember that the purpose of the emergency fund is to insulate your budget against unplanned “shocks.” For instance, if your car radiator goes on the fritz, chances are you didn’t have a “Radiator Repair” line item in your budget worksheet. (Some of you may have a “car repairs” section, which is essentially the same as an emergency fund, just a little more defined). Of course, getting an Aquos big screen before Super Bowl Sunday doesn’t warrant an emergency expense, although it’d be nice to have.

For me, I had to make some purchases that I did not forsee. I spent a couple days in private rooming in the hospital, which cost money. I made some home purchases to improve the upkeep of my house for the recovery period (which has gone on longer than expected). I had to change flight plans at the last minute which also cost money. But, these unforeseen but necessary expenses are perfect for emergency fund spending.

Instead of panicking, it’s best to lean on your emergency fund and to not dip too far into credit card debt, which is far easier to do. The key, however, is to ensure that you work to restore your emergency fund back to its prior standing before moving on. You wouldn’t drive a car after an accident without repairing the car and restoring the airbag (unless you’re just too cheap—and I won’t be riding with you). The emergency fund is there to help ride out the bumps Life sometimes presents. Use it wisely, and work to restore it when necessary.

See you next week.