Why Emergency Funds Are Dangerous To Have

Having a responsible financial foundation means having some type of emergency fund. However, this fund is often more dangerous to have than we may have thought. A thousand dollars set aside for an emergency is indeed wise, but it can also result in problems. The problem is the underlying temptation of the extra money. It can seem okay to spend it when it has been “XX” number of days since the last incident. Thus, you become too comfortable, and the $1,000+ starts looking good to use!

The Purpose Of An Emergency Fund

The emergency is not a new concept. It has been made popular by Dave Ramsey, but it is not his original idea. It has been the practice of financial advisers for a long time. The purpose of having this fund is to have a buffer in the event something major happens in life you were not expecting. This can be car issues, minor health issue, home problems, etc. It is there to help you avoid being completely out of pocket or having to use your credit card when something hits. Honestly, never having to use it should be something to be admired. 

The Misuse Seen

Over time an emergency fund can begin to seem like a waste of time and money. Living a life which doesn’t involve needing it does not mean you won’t ever need to, just that it hasn’t happened yet. However, if you are in a long season of everything going right, that extra money becomes tempting to dip into for things you may want. It can start off small like $100, but it can quickly spiral down until you use all of it.

Unfortunately, something similar to this just happened to someone we know. They needed to fix a garage door due to it aging. Although a moderate repair, it was something that could have been saved for as the door still worked just fine. However, the quote they got gave them a deal to replace both of their garage doors for $600. They proceeded and claimed that this is why they have an emergency fund. Now, I am all for deals, but this was clearly NOT an emergency? All I can hope is that there is not a serious REAL emergency that requires the money they just spent.

Be Smart – For Emergency’s Sake

Once you have an emergency fund, do not spend it unless it is truly an emergency. If you question what is and what is not an emergency, it is probably not an emergency. I truly believe when a disaster strikes in our lives, there is no doubt in our minds that it constitutes an emergency. We just know! Treat your emergency fund like a fine wine. The longer you have go without having to use it, the better you will feel when you have to use it. It will be so sweet (metaphorically speaking) to taste knowing it has been there waiting for you all this time. Just be sure to restock it once the emergency is over, and get it going for the next time you need it.