Those $500 Jay Z concert tickets is NOT an emergency.
That $200 restaurant bill after the concert is NOT an emergency.
That $200 fly a** outfit is NOT an emergency.
That $100 nails/pedicure set is NOT an emergency.

If none of these are considered an emergency, then what is?

Keep reading to find out more.

By now, if you have been tuning into My Dollar Has Cents regularly, you would know how important having an emergency fund (rainy day fund) is to the success of your financial journey. But what happens when you set an emergency fund up and every other bill seems like an emergency? Somehow that first withdrawal turns into several withdrawals and the cycle repeats itself until there isn’t any more money left.

Some people choose to ignore that inner voice telling them this may not be an emergency after all, others don’t even have that inner voice and withdraw their funds without thinking of the repercussions they may face in a true emergency. This can be such a vicious cycle to escape and I hope that this post can help someone understand the difference between a true emergency and one that may just feel like it.

In this post, I want to show you a few simple ways you can determine whether or not you are using your emergency fund for its intended purpose.

Emergency Fund vs. Savings?

Before we get started I want to briefly discuss the distinction between an emergency fund and a regular savings. An emergency fund is money that is kept away for unforeseen circumstances and a regular savings can be anything you are saving money towards. For example, if you’re saving money towards a vacation you should be saving that in a separate savings account so as not to interrupt your emergency fund. An emergency fund should be used for unexpected situations such as job loss, sickness, car issues, etc.

If you’re just starting an emergency fund and you still have consumer debt or student loans, raising $1000-$1400 as quick as you can will aid in you being prepared for the unexpected. A good rule of thumb is to have at least one month of rent saved up in a separate savings account you can easily reach in case of an emergency.This emergency fund will be the buffer between small emergencies and your day to day budget, so it’s crucial to start raising this money as soon as possible. If you need ideas on how to raise a mini emergency fund up, check out this detailed post here.

If your enjoying this post so far, please like, comment or share with friend and family. 

Some people may ask whether or not an emergency fund should be placed in a savings account? Of course your emergency fund can be placed into a regular savings account temporarily while you’re saving it, but separating it from your non-emergency savings will help you see that the two should not be mixed together because they do not serve the same purpose.

What Makes an Emergency an Emergency?

An emergency is an emergency when it meets one or more of these conditions;

– Does this “emergency” require your immediate attention?

– Does this” emergency” prevent you from meeting 1 or more of your 4 walls of necessities (Food, Shelter, Clothing and Transportation)?

– Was this “emergency” unexpected? 

Anytime you feel the need to dig into your emergency fund for a non-emergency purpose, remember to apply these three questions to your situation and see if the purchase qualifies you dipping into your emergency fund. This technique will help you justify each withdrawal reasonably and can help you save your money responsibly in the long run. If you answered “Yes” to most or all of the questions, then there is a chance that your reason for digging into the emergency fund is valid. If your situation has more “No’s than Yes’s” , then your reason for withdrawal may not be sufficient and you may be able to save for it instead. Using this technique will help you reach your full emergency fund goal 10x faster because now you will know exactly what makes an emergency an emergency and will cut out the unnecessary spending.

After this post, do you have a better understanding of the true intentions of an emergency fund? Please let me know below.

If you enjoyed this post, please like and share with friends and family. 




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