Do You Need to Replenish Your Emergency Fund After Every Withdrawal?

The quick answer? It depends how large those withdrawals are.

The Federal Reserve reports that 32% of Americans aren't equipped to cover a $400 emergency expense. But ideally, your savings account balance is in far better shape than that.

In fact, it's important to have an emergency fund with enough money to cover a good three to 12 months' worth of living expenses. That gives you a solid amount of protection in case you lose your job and don't want to have to live off of credit cards. It also leaves you with cash reserves to cover unexpected bills, like home or vehicle repairs.

Now from time to time, you may need to dip into your emergency fund to handle an unexpected cost your regular paycheck can't cover. But do you need to replenish every emergency fund withdrawal you take? Or should you make peace with a lower savings balance following an unplanned bill?

It's a matter of how much money you're removing -- and what you're left with

The whole point of having an emergency fund is not having to sweat it out every time you're faced with an unplanned bill. And you also don't necessarily need to stress over putting back every withdrawal you take immediately.

Let's say you spend $3,000 a month on living costs and have a $10,000 emergency fund. If you take a $300 withdrawal to cover a surprise medical bill, you're still left with $9,700. That's the bulk of your emergency fund. And it also leaves you with enough cash to cover a full three months of bills in the event that you lose your job. So in that situation, there's really no need to stress yourself out over putting back that $300.

Should you aim to put that $300 back eventually? Of course. But you don't necessarily have to slash your spending the month after that withdrawal to replenish those funds, all the while making yourself utterly miserable in the process.

But if you're forced to take a $5,000 withdrawal -- say, for a major home repair -- then that's a different story. That means you've suddenly withdrawn half of your emergency fund, and that you no longer have enough cash to cover three full months of bills. In that case, there's more urgency to put that money back.

Don't be afraid to tap your savings

Some people won't raid their emergency funds when unplanned bills strike, and will instead rack up credit card balances so as to leave their savings alone. But remember, the whole point of having an emergency fund is to be able to dip in and avoid going into debt when surprise expenses pop up.

It can be unsettling to have to take a large emergency fund withdrawal. And in that situation, you may feel the push to replenish that money quickly.

But don't panic if you find yourself removing a small percentage of your emergency fund here and there. That's exactly what that money is for, and there's certainly no need to feel guilty for taking withdrawals.

Having to raid an emergency fund doesn't mean you failed financially. Quite the contrary -- the fact that you had an emergency fund to tap means you did a great thing for your finances.