The 4 Worst Times to Spend Your Emergency Savings

Having an emergency savings fund provides a sense of security. It’s a good feeling to know that you have cash when you need it most. But how do you know when and when not to tap into your fund?  What really qualifies as an emergency? The Cheat Sheet is here to help out. Here are a few situations when it’s best to leave your stash alone.

1. Your friend or family member asks for a loan

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First of all, know that you will probably never see this money again. Friends and family are less likely to return the full amount borrowed. Second, realize that if you have to pull money out of your savings account in order to be able to help out, you are in no financial position to do so. Your best bet is to practice saying the word, ‘no.’ You can do it. Just stand in front of a mirror and practice your stern face. Don’t lend money you don’t have. If you are not financially stable, you need to work on helping yourself first.

2. There’s a sale

Source: Thinkstock

Source: Thinkstock

A sale is not an emergency. Sure, you may have been eyeing that top-of-the-line tech toy for months, but it’s still not a good reason to withdraw money from your nest egg. If you really want to make a big-ticket purchase that you’ve had your heart set on, save the money and purchase it with cash. Treating yourself to new things every now and then is nice, but before you know it, you will have dug yourself into a huge debt hole.

3. You have alternative means of getting money

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Think long and hard before you take money out of your fund. Chances are it took a couple of months or years to build that nest egg, so don’t be so quick to withdraw cash. Think of the sacrifice you made to get to where you are now. Ask yourself a few questions before making a decision. Could you temporarily work a part-time or seasonal job? Could you ask your boss if you can work overtime? Could you start a side business? Think of all the different ways you could raise money before raiding your emergency fund. Be creative.


4. You don’t need the item right away—or at all

grocery list, shopping

Source: iStock

An emergency savings fund is meant for those times when you need the money right away to cover a large—and necessary—cost, and there are no other funds available. For example, you need roof or car repairs or you had an unexpected medical emergency. If you don’t need to make the purchase right this minute, and you could wait a few days or weeks, why the rush? Don’t use your emergency savings for situations that could be handled with patience or other income sources. Weigh all of your options before making that withdrawal. Also make sure you really need to make the purchase.

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