The hardest part of an emergency fund can be deciding when to use it. Setting rules in advance takes the guesswork out.
Usually yes
- Job loss or a big drop in income
- Medical or dental bills you didn't expect
- Car repairs you need to get to work
- Urgent home repairs: a broken furnace, a leaking roof
- Emergency travel for a family crisis
Usually no
- Holidays and birthdays (they happen every year)
- Sales and deals
- Annual bills like car registration (save for these separately)
- Vacations
Three questions
- Is it unexpected?
- Is it necessary?
- Is it urgent?
General educational information, not financial advice. Penny Vaults isn't paid by any bank or lender.