Using Your Emergency Savings: What Is Considered an Emergency?
Building a solid emergency fund is essential for safeguarding against surprise life expenses. However, the 2013 Assets and Opportunity Scorecard revealed that 44 percent of Americans are “liquid asset poor,” meaning they lack enough savings to cover three months’ worth of living expenses and do not have savings to allocate toward future expenditures like buying a home or paying for a child’s college education.
But even those who succeed at starting an emergency savings account can fall victim to depleting their funds for the wrong reasons.
It’s very easy to fall into the habit of thinking that every bill you’re faced with is an urgent expense your day-to-day checking account cannot bear to handle. Knowing how to decipher a true financial emergency from just another bill is important if you expect to continue growing your savings.