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If you have an emergency fund, congratulations on taking that step toward being prepared in the event of a financial emergency. Of course, you must determine what a financial emergency is. It’s sometimes easier to say what it is NOT: it’s not just any old thing that you find yourself short of funds for. It’s not a new car that’s caught your eye. It’s not a great sale at Nordstrom’s. It’s not paying for your annual car insurance premium or for Christmas presents.

Emergency funds are for truly unexpected events that you ALSO can’t wait until you have the money for. If you are well-prepared, there should be little to none of these. Examples might be a natural disaster in an area that is NOT prone to natural disasters, or maybe a car accident where you need the money to pay for your insurance deductible. I ask myself a list of questions before deciding to use emergency funds. They might seem a little severe, but they are:

1. Will I or someone I love literally die if I don’t use this money?
2. Will I or someone I love suffer serious injury if I don’t use this money?
3. Will not spending this money actually increase my expenses down the road?

If the answers to those are yes, then I dip into my emergency funds. Otherwise, I view the situation as more of a discomfort than an emergency.