You will have to forgive me today because I am writing a midterm exam in a couple of hours so I didn’t have enough time to come up with a lengthy article. As all of you readers are probably aware of by now, Studenomics is more of a open community than a blog. Sure I may write the content but many of the ideas come from the dozens of daily emails I receive and from the great comments left behind.
The other week I wrote an article about emergency funds for young people which got a lot of great responses and once again spun off into another interesting debate. The question that I now find myself curious to have answered by everyone is how do you spend your emergency fund money? No it is not an oxymoron or grammatical error, I am curious to read how the readers have spent their emergency fund money in the past or how do you plan on spending your emergency fund money.
Stephanie of Poorer Than You wrote that she is more focused on her “getting established” fund which she will use towards getting her career and life off the ground. From paying for interview suits to covering moving expenses. Frank stated that he has an emergency fund of $10,000 which equals 8 months of living expenses. This interesting conversation has sparked the following questions:
How have you spent your emergency fund money in the past?
What do you constitute as a good reason for spending your emergency fund money?
Is there anything specific than you plan on using your emergency fund money for?
I have personally not touched my emergency fund money yet because I have been lucky enough to only have to deal with minor emergencies that I had money in my regular bank account for. In order for a situation to be considered an “emergency” for me I would have to be recently laid off and in the process of finding a new job, during which time the emergency fund money could help me get by. Hopefully that never happens but if it does then I will have to use my emergency fund money. Other then that I can’t think of any other reason for spending the money. Now it’s time for the readers to answer the question(s).
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Another great post. I find that I try and limit the use of our emergency fund to actual emergencies when something major happens that was unplanned. Things like job preparation or major purchases is usually slated for our ‘unplanned income’ account. We actually haven’t tapped in to our emergency fund since we’ve set it up.
Haven’t touched it… yet! And hopefully I won’t have to!
While in college, the only things I’ve touched my E-fund for have been unexpected car repairs. Yes, I know I should have a separate “car maintenance fund,” but I don’t. Yet. These next few months, immediately after college, I may have to dip into it if my getting-established fund is not enough. (Thanks for the link, by the way!)
I have only touched my emergency fund for one thing. I broke my glasses and needed replacements. Coincidentally I also had to have a new exam. Since I was using my emergency fund anyway, I decided to take this opportunity to get contacts. I bought a whole year of contacts and some cheap glasses for when I was feeling lazy. Thankfully, I’ve already replaced the funds I used.
I don’t have an emergency fund per se – I call it my “fun money”. It’s for:
i. Unexpected present-buying
ii. Unusually large one-off expenses (e.g. Buying a £60 ticket to see a musical)
iii. Saving up for a big treat for myself.
I want to go to Mexico this summer. I need between £800 and £1000. But I’m not sure whether to touch my fun money. I was planning on buying a new computer. Even if I used it all, I’d still be a couple of hundred short. So I’d need to dip into my proper savings account (affectionately known as the “house deposit fund”).
I never realised before this that I have a huge psychological barrier when it comes to spending money I’ve saved. Once it’s socked away in a savings account, I just don’t want to take it out, even when I’d be spending it on exactly what I saved it for (i.e. having one-off expensive fun!).
I haven’t had to use my emergency fund before. If I did I foresee it to be for either being laid off or to cover an insurance deductible.
Brother,
I hope to never have to use my emergency fund, as I just don’t like emergencies! Steady Eddie is my thing. Anyways, it is SO IMPORTANT to know where your money is and how to get to it fast if need be. I have friends in Houston who literally couldn’t buy anything for several days because they didn’t have access to cash. Crazy times out there. Love your blog, especially the WP Theme…you have good taste!
I spent it on my honeymoon cruise.
Okay- that sounds terrible. It’s partially true. I had money in my IRA that could potentially act as an e-fund while I tried to get married. Buying a ring, paying for a honeymoon, and furnishing an apartment is expensive.
We quickly repented and have a fully-funded efund for 6 months of living expenses.
@Jeff & Frank & Steve & Almost Millionaire Congrats on being able to avoid touching the emergency fund. I hope you guys never have to use the fund.
@Stephanie Don’t feel too bad, as a student it’s difficult enough to have an emergency fund let alone a fun for your automobile. I can’t say from experience but when dealing with your career people have told me to not worry about spending some money here and there because it will pay dividends for a long long time.
@Erin Good job on replacing the fund and you will now be ready if something were to happen in the future, hopefully you won’t have to dip into it ever again.
@Suzie The psychological barrier you mentioned is very interesting because I feel the exact same way. I would rather spend money from my upcoming paycheck then to dip into any of my accounts. As for the Mexico trip two words: do it. Yes I know other pf bloggers will tell you to save it but let’s be honest were probably the same age and my answer is realistic. Interesting enough I will have a post up next week discussing whether experiences are worth the price.
@The Financial Nut No worries man. You will only get married once (hopefully) so don’t feel bad about making it memorable. By the way, do you plan on posting any wedding pictures on your blog?
We’ve been lucky enough to not have to touch our emergency fund for quite some time. The most recent time was to pay our architect for our house plans. If things continue, we should be able to reimburse the emergency fund with a little more on top.
@Studenomist: I’m definitely going. I just have to figure out how!
I’m currently drawing down my emergency fund in order help meet ends meet after I was laid off of work. With unemployment and part-time work, it should last well into the summer, when (hopefully) I’ll be gainfully employed again.
As a result of this experience, I’m always going to make sure to have a large enough emergency fund to cover several months of expenses, with extra funds put aside for any large, foreseeable expenditures.
Those are some really tough questions. I think it is up to the individual as to how you spend your emergency money. I do think it is really hard to justify an emergency when you know that there could always be something more urgent in the future.