Is Having An Emergency Fund A Need or A Luxury?



Emergency fund is now a common term in the finance world. To give you an idea about what is an emergency fund, here are some examples how different personal finance bloggers define the words “emergency fund”.



What is an emergency fund?

“An emergency fund is an easily accessible stash of money for use only in case of emergency. It is not to be used to buy a new car. It is not to be used to buy a new PlayStation. It is not to be used to remodel your bathroom. It is for use only in case of emergency.” – JD of

“An emergency fund is for emergencies, and an emergency is an expense you had no way of anticipating.” – Joan of

“An emergency fund is basically a stash of cash that can bail you out in case of an emergency. – Lance of

Now that you know what an emergency fund is and what’s its real use, let’s discuss if you really need one or not?saving for an emergency fund

Is having an emergency fund a need or a luxury?

Having an emergency fund is optional in today’s world, right?

You may not even have one of your own, and you’re still living your life without any other problems besides your mortgage, your credit card debt, or just your husband being stupid again.

Maybe you are different, maybe you don’t have any problem at all. You have a great job, your own home, and a great family. You may even have a dog that has its own home.

master of the house dog

So, why should you even bother getting yourself an emergency fund when most see it as a luxury than a need?

Having an emergency fund shouldn’t really be considered as a luxury, it should be considered as a NEED. Why?

Wait. Let me ask you more questions.

What if you lose your job? What if your child gets into an accident?

What if your house got burned?…

…What if your dog needs medical attention ASAP?

That’s a lot of what if, right?

You don’t know what’s going to happen in the future, and that’s why having an emergency fund is a need. A big need actually.

An emergency fund can save you from getting in debt. You might think that borrowing money is not that bad after all because everyone you know do this every time.

Well, you should think again, and look at these statistics:

After reading all that, are you still doubting the importance of having an emergency fund?

If you think you can handle anything that might happen in the future, then you do nothing and just continue living your life like before. If you want to avoid getting into debt when something unexpected happens and feel more secured, then you’re going to build up your very own emergency fund now.

Do you have your own emergency fund? What made you build it up?

Photo Credit: 401(K) 2012 and Anne Hornyak

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  1. says

    At the moment, I sort of have a catch-all Emergency Fund/Savings account. The original intention of this account was to save enough to pay off my car loan when it’s due next year – but last summer I was on medical leave from work and I’m being laid off in less than 2 weeks, so this fund has acted more as an emergency fund than anything. I *should* be able to survive unemployment for a few months without making any significant dents into my savings as long as I keep on budget. Hopefully I will pick up another contract for the fall and will quickly replenish (and increase) this account.

  2. says

    Emergency fund is definitely a need for me. You never know what’s going to happen, so better be safe than sorry. But then, how much we actually ‘need’ it really depends on our preference I guess.

  3. says

    I have an emergency fund and I have had it for years; I built it when I was in college and have only had to use it once (thankfully). It’s a luxury, because the point of the EF is peace of mind; people survive without emergency funds all over the world, though I don’t suppose it’s very settling.

  4. says

    I prefer to use credit limits as emergency funds and invest the rest of the money. Being young single and healthy I have never had an emergency I couldn’t cover over a month or two, while the invested money has brought interests for over a decade.

  5. says

    After a recent emergency with our furnace, I would never go without an emergency fund. You never know what’s going to happen, and nobody plans for an emergency which is exactly why it’s so important to have one “just in case”.

  6. says

    I’m trying to build my emergency fund, for me it’s very important. I started building my e-fund a few years ago and I used it twice.

  7. says

    With many millennial I talk to (my peers) it seems like getting an emergency fund is like a hard habit to break. It is foreign, never taught to them, never witnessed by them and therefore a new obstruction in their life. The work of putting it together is often as intimidating as paying off debt.

  8. says

    I’m currently saving for this month for my emergency fund. I want to save $10,000 which I estimate is about 5-6 months of my own pure living expenses. Once I’ve saved that much I’m going to start saving for a few investments and then I’ll look at adding another $5,000 to my emergency fund. Ideally, I’d like to have $20,000-$30,000 sitting there in the next few years.

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