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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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.
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 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.
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.