An emergency fund is money that you put aside to act as a financial cushion from life’s surprises—usually around three to six months of expenses.¹ But what counts as an emergency when it comes time to spend the money? Ask yourself these four questions before tapping that pool of hard-earned money.

1. Is it a want or a need?  

Sometimes the difference between a want and a need can get a little fuzzy. It’s easy to convince yourself that a want is a need. For example, a bathroom remodel is a want, but a major leak is a need.

Medical expenses can be another gray area. A necessary, unexpected medical expense, like a trip to the ER, is a good candidate for using your emergency fund. Elective healthcare such as plastic surgery, which may not be an emergency, probably isn’t.

Remember, this fund is there to help you cover essential spending you didn’t see coming—when your savings or income isn't enough to cover the costs, and the need is something you can’t wait to address.

2. Do I need it right now?

Consider the time of year before dipping into your emergency fund to make an urgent repair. If the furnace conks out in the dead of winter, you need to get the heat back on immediately. Same with the air conditioning in mid-July, especially in hot climates.

Seasonal, expected spending, on the other hand, may not be a good use of your emergency fund. Expenses you can plan ahead for should be built into your regular budget. That includes things like back-to-school shopping, holiday presents, and regular house and car maintenance.

3. What’s the overall cost?

Weigh the cost of repairing or replacing a broken item. Ask yourself, is the repair cheaper than replacing it? Will the total cost to replace use up most of your emergency fund? Not every breakdown is an emergency, depending on your lifestyle. A refrigerator full of food that stops working is an emergency. If your dishwasher breaks down, you may be able to get by washing dishes by hand for awhile.

If possible, take 24 hours to give yourself time to think about it. You may decide it’s smarter to repair or replace later, or maybe even learn to live without it.

4. How does it affect daily life?

When deciding whether to tap into your emergency fund, think about the effect on your day-to-day life. If your car breaks down and you have no other way to get to work, that’s a need. If you’re a working parent with kids and the laundry machine kicks the bucket, replace it. If your phone falls in water and can’t be saved, you probably need to get a new one. If, on the other hand, you lose an expensive watch, chances are you can manage without one for a while and give yourself time to save up and replace it.

How to rebuild (or build) an emergency fund

So, you answered yes to all of the questions above and dipped into your emergency fund. Here are a few ways to help grow your fund (and your peace of mind) back to a place you’re comfortable with. As a reminder, your emergency fund should total around three to six months of your normal expenses.

• Review fixed expenses and identify ways you might cut back—like subscriptions.
• Automate savings to go into a money market fund or savings account—even $5 a week is a great start.
• Schedule “no-spend days” once a month or even once a week.
• Use parts of small windfalls like a tax refund to help boost the fund.

Having an emergency fund gives you some financial control over how you react to unanticipated events and helps you stay on track for other savings goals—like buying a home.

To start your emergency savings fund, sign up for a free emergency savings account today. There are no account management or distribution fees, and you can withdraw at any time. The registration process makes it easy. Just follow the steps to create an account, so you’re ready when an emergency strikes.