3 Questions to Ask Before Using Your Emergency Fund
Have you ever been tempted to dip into your savings? I think it's probably safe to say that we all have. Something pops up that seems like an emergency and we're tempted to reach into our rainy day fund. Unfortunately, a lot of times it's not an emergency. When this happens, and the voice inside is saying, "the emergency fund could pay for this," I want you to ask yourself these 3 questions:
1. Is it necessary?
Is this something that needs to be done? A broken car stereo may be annoying, but not necessary.
2. Can it wait?
Is this something that needs to happen right now, or could it wait a month or two (like a broken ice maker)?
3. Can you cash flow it?
Do you have enough room in the budget to fund it without dipping into savings? Could you use some of your fun money or restaurant money to cover the expense? If it doesn't pass this test, then it's probably not an emergency and you should leave your rainy day fund untouched.
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