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

Comments

Comment guidelines: No name-calling, personal attacks, profanity, or insults. Please keep the conversation civil and help us moderate comments by reporting abuse.
comments powered by Disqus

ENDORSEMENTS

Dave Ramsey

in a bad spot financially money troubles help...

Dave Ramsey

Dave Ramsey says: What do you do when you hit rock bottom?

A Dave Ramsey fan named Justin said he's in a bad spot financially with over $10,000 in debt, a totaled car and an apartment he's about to lose.

2 days ago

(Pexels File Photo)...

Dave Ramsey

Dave Ramsey says: Should you hang around for benefits?

Dave Ramsey responds to a letter from a fan who is currently in the military but isn't sure to leave and try new things or stay due to the benefits.

9 days ago

consumer debt financial dispute Arizona money tips...

Dave Ramsey

Dave Ramsey says: Imitate successful behaviors and navigating financial disputes

This latest column from Dave Ramsey dives into two big financial issues two readers are facing: consumer debt and a marital financial dispute.

13 days ago

Living on a budget: Lessons for 13- and 14-year-olds...

Dave Ramsey

Dave Ramsey says: Can they handle it?

Want to teach your kids about living on a budget? It's a good way to set them up for a successful financial future, according to Dave Ramsey.

20 days ago

Financial wellness journey Dave Ramsey...

Dave Ramsey

Dave Ramsey says: Can you spend for fun when beginning your financial wellness journey?

Can you spend for fun when beginning your financial wellness journey? Dave Ramsey answers in this week's column.

27 days ago

honeymoon married job loss financial advice...

Dave Ramsey

Dave Ramsey says: Should you go on a honeymoon right after you lose your job?

So you're about to get married. You have your honeymoon planned. But right before all the fun begins, you lose your job. What should you do next?

1 month ago

Sponsored Articles

...

Day & Night Air Conditioning, Heating and Plumbing

Why a Heating Tune-Up is Essential Before Winter

PHOENIX, AZ — With cooler weather on the horizon, making sure your heating system is prepped and ready can make all the difference in staying comfortable this winter.

...

Morris Hall

West Hunsaker, through Morris Hall, supports Make-A-Wish Foundation in Arizona

KTAR’s Community Spotlight this month focuses on Morris Hall and its commitment to supporting the Make-A-Wish Foundation in Arizona.

...

Dr. Shanyn Lancaster, Family & Sports Medicine physician, Midwestern University Comprehensive Care Clinic – Central Phoenix

Exercise is truly your best medicine

“You never slow down, you never grow old”. – Tom Petty

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