What are three questions to ask yourself before you spend your emergency fund?
Raiding your emergency fund may be a good idea if you have a financial crisis. That’s what it’s there for, right?
An emergency fund is a dedicated savings account meant to cover unexpected expenses or sudden income loss.
For some households, finding money to solve a financial problem can be very challenging. According to data released by the Federal Reserve in May 2025, 37% of Americans didn’t have the money to cover $400 in unexpected expenses using cash or savings in 2024. If that’s your situation, you may be facing financial emergencies often.
Generally, there are three questions you should ask yourself before you take some (or all) of your emergency money: Is this truly a financial emergency? Do I have another way to cover the cost? Is this consistent with the purpose of my emergency fund?
Question 1: Is this truly a financial emergency?
A true financial emergency is unexpected, unavoidable, and capable of causing financial hardship if not resolved promptly. Not every stressful expense meets that standard. A genuine emergency typically falls into one of two categories: a spending shock or an income shock.
- Spending shocks: Unexpected expenses, such as major car repairs or medical bills
- Income shocks: Sudden disruptions to your income, such as job loss
True emergencies are unexpected, urgent, and outside of your control. If you could reasonably anticipate the expense, such as annual insurance premiums or routine maintenance, it belongs as a component of your budget, not your emergency fund.
Here are some scenarios that are unexpected emergencies:
- You’re about to lose your house, but you have a really robust emergency fund that can save it.
- Your car is about to be repossessed, but you have money in your emergency savings account.
- Your electricity will be turned off if you don’t pay, but you have money in your emergency fund.
Brett Daniel, founder of Daniel Safe Money Retirement Solutions, says, “it’s best to use emergency funds only for true emergencies like job loss, job change, major home or auto repair, or medical debt.”
He says that if you’re constantly dipping into your emergency fund for non-urgent needs, it defeats the purpose of having an emergency fund.
Some expenses fall into gray areas. Maybe your kid needs money for something school-related. Maybe you wouldn’t classify this situation as an emergency, but you also don’t want your child to go without something important. In these cases, evaluate whether the expense is truly unexpected or just unplanned.
Question 2: Do I have another way to cover this cost?
Before withdrawing money from your emergency fund, consider whether you have other alternatives. If you do have another reasonable way to pay the expense, you may want to leave your emergency fund alone.
Still, so much of the decision depends on how much money you have saved. If you have a lot in your savings account, and you can use your emergency fund without hurting your finances, then the answer may be straightforward.
George Raftopoulos, adjunct finance lecturer at Bentley University, says, “typically, an emergency fund should be enough funds to carry someone through a three-to-six-month period of time should they find themselves without employment, or should an emergency occur.”
If you have six months of living expenses saved, and you need new tires, using emergency savings and replenishing it later may be reasonable.
If you have just enough in your savings account for a set of tires but little else, that is when taking money out of your savings can feel more consequential.
In some cases, partial funding may be appropriate. For instance, let’s say that you have a car that needs $1,200 in repair work, but $600 would make it safe for now, using emergency funds to address the urgent repairs while preserving the rest is a reasonable solution.
Question 3: Is this consistent with the purpose of my emergency fund?
An emergency fund should serve the purposes you originally intended it to, which is usually to protect you from unpredictable but necessary financial disruptions. Consider whether the expense aligns with the fund’s purpose. If it doesn’t, it may not qualify as an expense worth using emergency funds. “Emergency fund” can mean different things to different people. Some people treat an emergency fund as a catch-all savings account where they put all extra money and dip into it, as needed. Others reserve it strictly for true financial emergencies.
There isn’t necessarily a right philosophy as long as the emergency fund serves whatever purpose you created it for. What matters most is consistency. If you routinely use your savings for non-emergencies, the fund may not be there when a true financial crisis occurs.
Final guidance: When should you spend your emergency fund?
Most financial emergencies are either spending shocks or income shocks. Your emergency fund is designed to protect you from both.
Stacy Mastrolia, co-chair of the accounting and financial management department and associate professor of accounting at Bucknell University, defines an emergency as “unpredictable, unexpected, and necessary.”
If the expense is unexpected, necessary, and aligned with why you built your emergency savings in the first place, using the money may be appropriate. If it’s predictable, optional, or simply inconvenient, it likely belongs in your budget instead.
If you do withdraw from your emergency fund, make replenishing it a priority. Your financial stability depends on being prepared for the next emergency. “What many people overlook is that as soon as you use your emergency fund, you need to make replenishing it a top priority,” Mastrolia says. “After all, emergencies can happen more than once.”
The best way to prepare for unexpected expenses is to clearly define what qualifies as an emergency and build your savings accordingly. Many experts recommend keeping emergency savings in a liquid account that earns interest, such as a high-yield savings account.
