3 Questions To Ask Before Dipping Into Your Emergency Fund

Having an emergency fund is great, but how can you ensure it’s there when you really need it? It’s easy to set aside money for a rainy day, but what happens when we start dipping into that fund for things that aren’t actually emergencies?

The Bible has much to say about wisdom and preparation, and Proverbs 21:20 offers a powerful reminder: 

“Precious treasure and oil are in a wise man's dwelling, but a foolish man devours them.”

This verse highlights the importance of saving rather than consuming everything we earn, urging us to be prepared for the inevitable challenges that come our way. An emergency fund is one of the most effective financial tools for navigating these moments. It provides a safeguard against unexpected expenses and helps you avoid unnecessary debt.

Financial emergencies are almost a certainty in life. They can range from minor inconveniences, like a flat tire, to major setbacks, like a costly medical bill. Establishing an emergency fund reduces stress and provides a financial defense. While building wealth requires a good offense, protecting that wealth requires a strong defense, and an emergency fund is central to that strategy.

How Much Should You Save?

To get started, aim to save an introductory fund of $1,000 to $1,500 for minor emergencies. Once you’ve paid off all debt except for a mortgage and are taking advantage of any employer matching contributions, work toward a fully-funded emergency fund of three to six months’ worth of living expenses. This larger reserve will protect you from significant financial disruptions, such as job loss or a major health crisis.

When to Use Your Emergency Fund: Three Key Questions

Not every expense is a true emergency. Before tapping into your emergency fund, ask yourself these three questions:

1. Is This Urgent? If an expense can wait, it might not be an emergency. Consider saving up instead for non-urgent needs.
2. Is This Necessary? Understanding the difference between needs and wants is essential. A functional, affordable solution often serves better than a luxury purchase.
3. Is This Unexpected? Some expenses, like holidays or birthdays, are predictable and don’t qualify as emergencies. Plan ahead for these recurring costs to keep your emergency fund intact.

Using Your Emergency Fund Wisely

Even when an expense qualifies as an emergency, aim to spend as little as possible. Adjust your budget temporarily to make funds stretch further, and focus on replenishing your emergency fund as soon as possible.

A well-funded emergency account provides more than financial security—it allows you to maintain peace of mind and continue giving generously, regardless of the circumstances. By preparing for the unexpected, you’re also equipped to live out your values, knowing you’re ready for whatever comes next.

On Today’s Program, Rob Answers Listener Questions:

• I have to take the RMD this year and want to roll it over to an IRA to make the Qualified Charitable Distribution (QCD). However, I have deferred compensation, and they said they can't do that. Can I roll it over to an IRA? If so, how do I do that? Does it cost money? Do I have time before the end of the year?
• My question is about tithing. Tithing is mentioned in the Old Testament, but in the New Testament, Paul stresses giving from the heart. Some say they give as they purpose in their hearts, sometimes more, sometimes less. I'd like your opinion on this.
• I'm 65, recently retired, and will only receive a partial paycheck until Q1 2025. I have $10,000 in credit card debt and a $10,000 car loan but only $50,000 in my IRA. Would it be wise to withdraw $10,000 from my IRA to pay off the car loan since I won't be able to afford the $400 monthly payment once my partial paycheck ends?

Resources Mentioned:

• Christian Credit Counselors
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.