When To Use And Not To Use Your Emergency Savings?

When Is The Right Time To Use Your Emergency Savings?

Surprises are great when it comes to birthdays and anniversaries, but rarely for financial emergencies. To safeguard your financial health from emergencies, you may have saved up to 6 months’ worth of your salary. Now the question remains: when is the right time to use your emergency savings?

When You Should NOT Use Your Emergency Savings?

Everyone has different notions of financial emergencies. However, there is a right and wrong answer here. Do not use your emergency savings for these expenses:

1. Expected Expenses

These are some expenses which are scheduled once every quarter or every year. Examples of these are:

• Property or income taxes
• Annual car registration
• Back-to-school shopping

2. Shopping For The Holidays Or Birthdays

It is tempting to use your emergency savings fund for these expenses, but you should not because they are not really emergencies. These infrequent expenses could chip away at your emergency savings and you could end up not having enough, when you have an actual emergency.

https://www.youtube.com/watch?v=Fiyd2BTJl0U&t=8s

3. Non-essential Expenses

Your emergency savings should not be used for leisurely expenses, such as:

• Vacations
• Phone upgrade
• Bargain sales
• Someone’s else emergency needs

4. Major Goals

Emergency savings are allocated for a rainy day. You should not treat it as a life savings fund that you can use for your life goals. Don’t use your emergency savings fund for these things:

• Down payments for a house
• A new car
• To start a business

When You SHOULD Use Your Emergency Savings?

In contrast, if you are ever in a position where you are faced with an unexpected, essential, and urgent expense, do not be afraid to tap into your emergency savings.

• Living expenses after a job loss or pay cut
• Car repairs or replacement after an accident
• Emergency medical expenses
• Emergency home repairs

These expenses are just a few examples. Do not limit yourself to these. However, before using your emergency savings, ask yourself whether the expense is essential and urgent.

Best Practices: Finding Alternatives And Replenishing Your Funds

If an expense is not as urgent, consider looking for alternatives sources of money. Our Access Loans^TM product is a convenient alternative to tapping into your emergency savings.

Always remember to replenish your emergency savings fund. Do not waste time, replenish it as soon as you can, so you don’t add to the number of Americans without an emergency fund.

Read about our ACCESS LOANS^TM product here.

* ACCESS LOANS^TM product is offered by Safra National Bank of New York (“SNBNY”). Member FDIC. Equal Housing Lender.