Why I Haven’t Tapped My Emergency Fund in Almost 5 Years

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I have an emergency fund but I haven’t had to rely on it for almost five years. Here’s why I no longer need to touch my emergency savings — but why I still have it anyway. 

This January, it will be five years since I’ve taken any money out of my emergency savings. I have six months of living expenses kept in a high-yield savings account, and I’ll keep it there in case I need it — but I have not had to rely on it in almost half a decade.

This is not because I’m immune to things going wrong. Instead, there’s another very simple reason why I can leave my emergency savings alone while also not reaching for the credit cards when I need to pay for costs that aren’t part of my normal routine.

Here’s why I haven’t relied on my emergency fund in a long time

The reason I have not had to touch my emergency fund in a very long while is because I have dedicated savings for most of the expenses that cause people to turn to their emergency fund in the first place.

An emergency fund is there in case of job loss or an income disruption, but it’s also there to cover unexpected expenses. With studies showing 60% of households had experienced an unexpected financial shock over the past year, many people face surprise costs.

The reality, though, is that a lot of expenses that people treat as a surprise or an emergency are actually somewhat predictable. For example, people often tap their emergency funds to:

Cover medical billsPay for home repairsPay for car repairs

Now, it’s absolutely true that you can’t know when you’re going to need to see a doctor or go to urgent care or replace your air conditioner. But, it’s also equally true that at some point, you’re going to have to see a doctor, fix something at home, repair your car, or get a new one. And, while you can’t predict when you’ll need money for these things, you know you’ll need it at some point.

Since I’m aware that these expenses are going to creep up, I have dedicated savings accounts for all of them. I also have a dedicated savings account for “unexpected kid costs,” for situations like when my children outgrow their clothes before I thought they would, or need a whole bunch of birthday party gifts at one time.

Because I have savings for the most common types of “emergencies,” I don’t have to turn to the money in my emergency fund. That cash is there in case something truly surprising goes wrong. I have the peace of mind that I can cope with a real disaster that there’s no way to predict.

Saving for expected surprise expenses could help you be more financially secure

Saving up a general-purpose emergency fund is an important first step if you want to make sure you don’t end up in debt or living paycheck to paycheck. But once you have accomplished that, and are on track for retirement savings and debt payoff, you may want to also start dedicated savings accounts to prepare for the costs you know will hit some time but can’t predict when.

Consider having a home repair fund that you contribute 1% of your home’s value into each year, as well as a car repair fund and a copay or medical care fund as well. The amount you’ll need to put into each of these can vary depending on factors like how old your car is and your max out-of-pocket cost for health insurance. Look at your financial situation, figure out how much you’d need to be ready when these inevitable “surprise” expenses come your way, and start saving for them today.

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