How do I know when to use my emergency savings?

Defining an emergency

None of us likes that feeling that if something unexpected were to happen we’d be scrambling to figure out how to pay for it. That’s why being emergency-proof is so awesome. 

What does it mean to be emergency-proof? 

Being emergency-proof means being ready for whatever life throws at you. Especially those speed bump situations - the everyday things like the car needing a new alternator. Putting aside $1,000 can keep these incidents from becoming a pain in the wallet. 

Check out our e-book to learn all the ins and outs of emergency-proofing. 

When should I use my emergency-proof money? 

It can sometimes be hard to know when we’re faced with a speed bump. When it’s in doubt, ask these three questions: 

  • Is it urgent? 
  • Is it unexpected? 
  • Is it necessary? 

Let’s look at some different situations to help us understand when would be the right time to use that speed bump money. 

Verdict: Emergency or not? 

SITUATION 

Your best friend in the whole world just sent out invites to his or her wedding in Mexico. 

VERDICT 

Not an emergency. Invitations usually go out at least 6 months in advance. You should be able to begin saving for the trip and leave your speed bump money for those unexpected things that may drop in your path. 

SITUATION 

Your air conditioner just broke and there are still two months (or more) of hot weather ahead.  

VERDICT 

Emergency. Making the call on this one can depend a lot on when it happens. If there is dangerously hot weather ahead, getting it fixed is important. But if it broke on an unusually hot day in the fall, you may have enough time and cool weather ahead to save up for the repair before the warm weather rolls back around. 

SITUATION 

You’re having a Super Bowl party, and the newest, highest definition TV just hit the market. You have to have it. 

VERDICT 

Not an emergency. While it would be nice to replace your old model and give your friends the best Super Bowl ever, it isn’t exactly urgent. If you do need an upgrade, find one that fits your budget and let that speed bump money do what it’s supposed to do – be there in case of a real emergency.

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