DAVE RAMSEY

Dave Ramsey says: An emergency fund isn’t about instant gratification

Jan 16, 2024, 1:00 PM

Money looking at hundred-dollar bills....

(Pexels Photo)

(Pexels Photo)

Dear Dave,

We’ve all our debts paid off, except for our home, and our fully funded emergency fund of six months of expenses is in place. In talking to people, it seems there are lots of different opinions as to what constitutes an emergency. What guidelines do you suggest when deciding whether to use our emergency fund?

Ingrid

Dear Ingrid,

There are three things to ask yourself when you’re tempted to dip into your emergency fund. One, is it unexpected? Things like Christmas, birthdays and even certain bills come around at the same time every year. If you’re not already budgeting for these things, it’s time to start. Otherwise, you might use your emergency fund for something that’s just the result of poor planning.

Number two, is it absolutely necessary? Most of us think we know the difference between needs and wants, but sometimes the line gets a little blurry. If your car goes completely kaput, and you need transportation, use your emergency fund to buy something affordable and reliable you can pay cash for. But don’t dip into your emergency fund just to upgrade your good car for one with a million bells and whistles. That’s a want, not a need.

And three, is it urgent? Sometimes, you have act like a grown-up. Every idea that pops into your mind isn’t unexpected, necessary or urgent. You can live that way if you want, but the result will be a quickly depleted emergency fund. Then, what’re you going to do when a real emergency comes along?

Practice the art of patience. Avoid impulse buys. Urgent things include stuff like a broken air conditioner in the middle of summer, a busted transmission or sudden, unexpected medical expenses. A big sale at Wal Mart? No. Concert tickets? Definitely not. That great new pair of shoes you just saw in a store window? Give me a break!

Your emergency fund is about long-term security, not instant gratification. Don’t use it on a whim. But don’t be afraid to use it when you really need to!

—Dave

ENDORSEMENTS

Dave Ramsey

Couple sits at table, seemingly planning out life....

Dave Ramsey

Dave Ramsey says: My wife thinks she owes me money

Struggling with financial tensions in marriage? Dave Ramsey offers insights on overcoming guilt and building a united front in managing debt.

3 days ago

Woman seeks financial support from father...

Dave Ramsey

Dave says: Work together, and increase expectations gradually

There are ways we can support our children financially without completely pulling the rug out from under them. Here are tips from Dave Ramsey.

6 days ago

(Pexels Photo)...

Dave Ramsey

Dave says: If you’re not going all in, stay out

Think twice before diving into that new business venture! Success requires a hefty 40-50 hours a week commitment.

10 days ago

(Pexels Photo)...

Dave Ramsey

Dave says: Seeking mediation with a neutral third-party advisor”

If someone close to you is having financial problems with their spouse, it might be best to refer them to a marriage counselor rather than insert your own advice.

13 days ago

In this week's article, Dave Ramsey talks about when to buckle down and climb out of that financial...

Dave Ramsey

Dave says: Getting out of a big mess doesn’t always feel good, but it’s necessary

Getting yourself out of a financial big mess doesn't always feel good, but sometimes, it's necessary to get back on track.

17 days ago

People sitting at a table, looking upset about bills....

George Kamel

The normalization of debt: How it happened and why it’s keeping you broke

The financial systems we trust benefit from our struggles. Break free from the cycle and rethink your financial game plan.

20 days ago

Sponsored Articles

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

Dave Ramsey says: An emergency fund isn’t about instant gratification