Is it more stressful to not have an emergency fund or to spend one you already have?

Locked Piggy BankKJ: If you don’t have an emergency fund, the answer to you may seem simple, but once you’ve built up that emergency fund, then when it comes time to actually dipping into it for an emergency – yes, that’s right, an emergency – you may find that your answer to the question isn’t so simple!

Before we go any further, if you don’t have an emergency fund (or don’t have an adequate one yet), then read our prior post on why you need an emergency fund, so you can get on track sooner rather than later. That’s priority numero uno.

If you do have an emergency fund – go ahead and pat yourself on the back whether you’ve made it all the way to build it up or you’re still working on it! – then the chances are you have been faced with this question before. A tree falls on your house, your car breaks down on the side of the road, or you have a sudden medical complication that has your head running in a tailspin as you try and calculate all the numbers and expenses that are coming your way.

Spending your hard-earned savings can be stressful
It can be quite difficult to psychologically part with any of the money you’ve built up. You spent your hard earned time building it up, so when it comes time to deal with the actual emergency itself, you may find yourself cutting your expenses further for the month rather than wanting to dip into your savings. I mean, if you can still make it work and not really cause your budget to be completely turned upside down, then why not? The sense of accomplishment of making it work within your month is quite rewarding to know that you were able to take the challenge head-on.

Once you spend it, you have to work to build it back up
An obvious issue, but part of the reason why it can be so difficult to spend that hard-earned cash. Hopefully if you’ve been good about your emergency fund, once it’s built up, you just redirect the savings to additional retirement savings or to other longer-term investment savings. So, if you have to build back up the emergency fund again, then you may just need to revisit your priorities on whether other savings amounts will need to be adjusted.

It’s always a moving target
Hopefully over your career you are increasing your income as you build up your skill-set in making yourself marketable to employers. If you simultaneously increase your expenses while your income soars, then you’ll find that your emergency fund needs will soar to new heights as well! All the more reason to just keep your expenses low and to ratchet up your savings, not your lifestyle.

You get accustomed to your new normal
You get used to watching your emergency fund as a nice little addition to your net worth. Whether that’s $5k, $10k, or $20k+, parting with any portion of it means your net worth takes a hit. And who likes to see their net worth decline? You get used to seeing it build over time that you hate to have a period of time where it dips some. Sometimes though it can be the push you need to try and find creative ways to make money the weird way like we did this last month. I mean, everyone needs a little inspiration here and there to innovate, don’t we?

    Have you had to dip into your emergency fund before?
    Did you have to fully-fund the expense from the account or did you cover some of it from your budget?
    Was it difficult to build up the emergency fund again?

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2 thoughts on “Is it more stressful to not have an emergency fund or to spend one you already have?

  1. I’m trying to rebuild my emergency fund because I spent some of it. These past previous months were really crazy, I got sick and I need to have a follow up check ups every month.

    • Definitely one of the least fun ways to spend that emergency fund! Thank you for sharing, and I hope you are on the mend! Best of luck as you build back your emergency savings too.

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