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How to Never Deplete Your Emergency Fund (6 Tips)

The more cash you have, the easier it’ll be to survive rough times. Fortunately, there are several tricks and strategies to ensure you always have enough in the account.

An emergency fund will help you cover your living expenses when your income decreases or you lose it. In some instances, an emergency fund can cover an immediate expense that you cannot cover from funds in your checking account.

It’s great to have an emergency fund, but most people don’t.

According to a survey, “approximately 58% of Americans have less than $1,000 in their savings accounts and 32% don’t even have a savings account.” The reasons vary. Some people feel they can’t afford to save, whereas others downplay the importance of saving or put it off until later.

But while some households lack a sizable savings account, you might have an emergency fund for life’s unexpected surprises. It might not be a six or eight-month fund, but it’s more than the average person’s account.

Building an emergency fund from nothing takes time and effort.

In fact, this might be your hardest financial challenge. However, the challenge of growing a cash reserve may not compare with the willpower it takes to keep money in this account.

After sacrificing extras and luxuries to build your account, it’s tempting to dip into your emergency savings. The occasionally teeny-tiny dip may not have a huge impact in the long run, but you can run into problems if you cannot keep your paws off the account. It doesn’t matter if it’s been years since a “real emergency,” the worst thing you can do is deplete (or nearly deplete) your funds.

The more cash you have, the easier it’ll be to survive rough times. Fortunately, there are several tricks and strategies to ensure you always have enough in the account.

1. Understand the definition of an emergency

It’s important to understand what an emergency is and what it’s not. In an emergency, you need immediate funds to take care of an urgent matter. You need cash, and you need it now. Maybe you lost your job or can’t delay a home or car repair due to the risk of complications. Or maybe you need to pay off a creditor immediately to avoid a collection account.

On the other hand, an emergency fund is

An emergency fund is primarily used to cover monthly expenses in the event you lose your job or your work hours are cut. That savings isn’t for when you want to have a good time with your friends or an extension of your income.

At the end of the day, it’s your money, and you can do what you want with it.

But if you start withdrawing money from this account for non-emergencies, you may not have enough cash for a real emergency, so you might have to rely on credit cards.

2. Get a separate account for other expenses

Money in an emergency fund should only be used for emergencies. If you have other plans that require a large sum of cash, such as buying a house, going on vacation, or doing home improvement projects, set up a separate savings account for these goals.

Understandably, your money only goes so far. You can deposit half or a third of your disposable income into your emergency fund and the remaining funds into a separate savings account. This way, you can continue to grow your emergency fund while planning for other goals.

Ask your bank or credit union about opening multiple savings accounts and titling them for specific reasons. Find the best savings accounts on the phroogal marketplace.

3. Don’t make it easy to access the funds

Keeping your emergency savings account in the same bank as your checking account is asking for trouble. The accounts are probably linked, making withdrawing money from your savings easier. You should keep your emergency fund inaccessible, preferably with a bank not directly tied to your checking account.

If you’re more concerned with minimizing impulse withdrawals than same-day cash, online savings might be the way to go. Plus, these accounts usually earn a higher yield than other savings accounts, helping you get a higher return on your money.

Having an online savings account helps curtail impulse buys and needless withdrawals. But this also means you won’t have access to same-day cash in an emergency, so consider this.

4. Don’t stop adding funds to the account

Hitting your three to six-month cash reserve goal doesn’t mean you should stop building your emergency fund. You don’t need to add as much to the account every month, but you’ll want to continue growing it. You don’t want a single emergency to completely wipe out your funds. Continuing to add money to the account increases the likelihood of having a surplus once you take a big withdrawal.

Are you tight on money and can’t find the extra dollars in your paycheck? Find a side hustle to help you make extra cash to add to your emergency savings.

5. Tap your account as a last resort

If you need a car repair, your first impulse might be to get money from your emergency fund. But while your vehicle needs attention, does it require immediate attention?

Ask yourself if not having the vehicle repaired right now may cause work-related issues and impact your income. If not, could you hold off a week or longer until you receive more paychecks? If you save up, you might avoid tapping your emergency fund altogether.

Of course, you can always borrow from your savings and pay yourself back. But even if you have good intentions, those funds might never make it back into your account.

6. Don’t use your funds to solve other people’s problems

Your emergency fund is your financial backup plan, not a solution to everyone else’s financial problems. It’s loving and kind to help a friend or relative through hard times, but you must consider the impact on your finances.

Will helping this individual put a serious dent in your emergency fund? Do you doubt this person’s ability to pay back the funds?

This is your choice, just make sure your decision isn’t entirely based on emotions. As a rule of thumb, only lend money you can afford to lose.

If you haven’t begun saving, now’s the time to get serious. Commit to paying yourself first and save every windfall you receive.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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