Emergency Fund
Having an emergency fund is all the rage these days, but knowing how to effectively use one, and the reasons for its existence are still somewhat perplexing.

If you have already made the decision to start your fund, or you have had one for a while then congratulations. It is an important financial milestone to reach and shows a great deal of economic prudence for you and your family.

The question then arises of when is it acceptable to use your emergency fund?

There are so many uncertainties in life, and dipping into any form of savings often feels inappropriate – especially if you have amassed any significant cash balance.

But remember, your emergency fund is there for a specific reason – to alleviate financial pressures when you experience an unforeseen event – namely an emergency.

So let us now look at the 5 main categories you should consider tapping your emergency fund for – and give yourself permission to take advantage of this incredibly useful tool.

Recommended article: How to Start An Emergency Fund

Income
This is the single biggest reason an emergency fund exists. After all, with a steady and consistent income most emergency’s can be covered with income alone. However, when the very source of your financial stability is shaken, you will need immediate support.

In recent months, the world has seen unbelievable job uncertainty for millions of people. Many have been temporally furloughed, made redundant or worst, lost their jobs entirely. Therefore, accessing your emergency fund as a stop gap between job loss and re-employment is totally legitimate.

Most experts recommend an emergency fund the size of 6 months worth of income. This should give you ample opportunity to look for new employment and rectify your financial situation.

Medical
We never want to experience a medical emergency, but as the average population age increases, more of us are becoming susceptible to health conditions. And with medical costs being such a finical strain, even with the best of insurance policies, it is worth considering your emergency fund to soften the blow.

There are often times where insurance will fully cover the health related problems and require no additional cash. If you are in the unfortunate position where the nature of the medical issue requires greater care, the costs can escalate enormously.

So using your emergency fund for this purpose is not only financially sensible, but essential for your wellbeing and happiness. We should always place a priority on our health, even if it means the old wallet taking a hit.

Transport
Transport related emergencies may seem trivial, and by their very nature not worthy of your emergency fund. But take a moment to consider the importance to your daily life of unrestricted mobility. Your job will almost certainly be solely dependent on your ability to use transport. And if this is affected, so will your ability to earn your income.

Maintaining your vehicle and or access to public transport is definitely a valid reason to use your emergency fund. I am one of those people who hates to spend money on their car. But recently I had a warning light come on, and was told by the garage that $500 worth of repairs was required.

This was an unplanned and unforeseen emergency and I required the use of my fund to cover the costs. My job requires me to travel, and therefore maintaining a working vehicle is an expense that must be paid.

Law
As I am sure most of you are law abiding citizens then the hope would be to never experience this sort of emergency. However, being on the wrong side of the law can happen to any one of us at any time. And having the right level of legal protection is imperative to our freedom.

You could be wrongfully accused of a crime, unknowingly committed an offence or just be caught up in something that needs to be cleared up. Either way, having a defence layer and the correct legal advice is an emergency where you should always use your emergency fund if needed.

Home
Finally, have you heard the saying ‘home is where the heart is?” Your home is one of the most important assets in your life, and should be treated so. If there are any problems that need immediate attention, they should not be left alone.

If you own your property, then this is possibly the single biggest investment you have ever made. And problems with structure, electrics, plumbing and interiors should alway be treated as emergencies.

Also, if you rent your property, you may still be liable for certain upkeeps and expenses. And failing to adhere to these may result in breech of contract. So anything that happens in your home that needs financial attention could and should be covered by your emergency fund.

Conclusion
Emergencies can happen, and should always be treated quickly and effectively. Your emergency fund was designed for such events, and so you should give yourself permission to use it.

You can always top up your emergency fund once you have depleted party of it. You should consider it as a fluid fund that needs to be adaptable to different situations. Hope that you never have to use it, but rest easy in the knowledge it’s there.