Tired of Raiding Your Emergency Fund? Do This Instead

If you've managed to sock away some money in your savings account for emergencies, good for you. Having an emergency fund will often spell the difference between racking up costly credit card debt and avoiding it when unplanned bills arise.

In fact, a recent SecureSave survey found that 67% of Americans could not cover a $400 emergency expense with money in savings. So if you're well beyond that point, you're in a good place.

But while it's definitely a great thing to have emergency savings, it's not a great thing to keep tapping your cash reserves. If that's been happening a lot lately, you may need to make some adjustments to your budget.

The problem with frequent emergency fund withdrawals

If you have an emergency fund, you should expect to have to use it at some point. But while it's one thing to tap your emergency fund once a year for something like a home or car repair, it's another thing to raid your savings more frequently to cover things like home maintenance, medical bills, and higher living costs due to inflation. And so if you've been hitting up your emergency fund on a regular basis lately, it's probably time to rethink your spending and change your budget a bit.

Let's say that in the past six months, you've taken an emergency fund withdrawal on three separate occasions to partially cover your grocery bills, and on three other occasions to cover medical bills you didn't expect. That should serve as a sign that you need to adjust your budget to allow for more grocery and medical spending.

The problem with tapping your emergency fund too often is multifold. For some people, taking an emergency fund withdrawal is upsetting, so you're putting yourself through that time and time again. But getting used to raiding your emergency fund and learning to roll with it isn't so great either, because once you get into that habit, you might come to rely on your emergency fund on a regular basis.

Furthermore, if you keep taking small emergency savings withdrawals to cover expenses like food and healthcare, you might end up with inadequate funds to pay for things like major home repairs or a period of joblessness. So if tapping your emergency fund has become a regular occurrence, you may want to do what you can to break that cycle.

Is your emergency fund still sufficient?

If you've been hitting up your emergency fund pretty often lately, you may no longer have the same amount of money you had when you first built up that pile of cash. As a general rule, you should aim for a minimum of three months' worth of bills in your emergency fund. If you're no longer there, consider it an immediate wake-up call to rework your budget so you can carve out money to build your emergency savings back up. That way, if you lose your job or get hit with a really large expense, you won't be left in the lurch.