What To Ask Yourself Before Dipping Into Your Emergency Fund

You know it’s important to have cash on hand in case of an emergency, but when is it okay to dip into that aptly named emergency fund? Some scenarios are so obviously emergencies – you lose your job and rent is due – but others can be iffy.

A few weeks ago, my cat had a minor health emergency that cost me $1000 in vet bills (mee-ouch). It was unexpected and I didn’t have enough in my savings account to cover it. As painful as the bill was for me, poor Theo was in even more pain. To me, the answer was obvious: dip into the old emergency fund. That’s what it’s there for, right?

In other scenarios, however, you might not be sure if dipping into your emergency fund is the right move.

Let’s say your car breaks down. Does that count as an emergency? For some people, the answer is an emphatic yes. For others, it depends. Maybe you can take public transportation while you save up. Maybe you can carpool.

Like so many money questions, the answer depends on your own personal situation. That said, here are three questions to ask when you’re not sure if you should dip into your emergency fund or not:

• Can I save up for this? Is it possible to save the cash for this expense in a reasonable amount of time?
• Is there an alternative to spending the money? For example, if your car breaks down, can you take public transportation while you save up for the repair?
• Will it cost more if I postpone paying for this? For example, if you need dental work, will it be more expensive if you put it off until you save up for it?

You can use these as a starting point to help you make a decision. Of course, if you’re dipping into your emergency fund month after month, it’s probably time to adjust your budget.