Tapping & replenishing savings - MoneySense

Tapping & replenishing savings

You scrimped and saved and finally, after many, many months, you got your emergency fund up to four months’ worth of essential expenses.



You’re rounding the corner on five when – BAM! – a crisis hits and you have to dip into your savings.

Once the worst is over, you breathe a sigh of relief and then look at your decimated emergency fund and sigh. It’s going to be a long road back.

What do you do when your emergency fund has been used for its intended purpose and you’re facing the prospect of having to rebuild it? Do you just keep saving at your normal rate and hope things will move along more quickly this time? Or do you ratchet up your savings with an eye to re-establishing your emergency fund as soon as possible?

Since replenishing the fund more quickly would mean giving up most or all the fun things you love to do, would you even be able to sustain it?

Having worked hard to build your emergency fund – and your safety net – to the point where you could breathe easily, it’s pretty normal to feel a little anxious when you have to tap your emergency fund. But hey, that’s exactly what it’s for. Only in perfect world would it remain untouched.

If you’re unwilling to take the same amount of time to rebuild your savings that it took to create the stash of cash in the first place, you’ll have to look for ways to boost your efforts.

Cut back on your usual indulgences. Eat out less often, trim back on luxury items, and slow down your spending. If you’re used to getting your hair cut once a month, do it once every six weeks. If you usually buy yourself a of couple books, CDs or DVDs a month, halve your purchases and send the rest to your emergency fund. Have a cup of coffee every day? Bring your coffee from home for a few months until your emergency fund is back where you want it.

Make more money. Ask for overtime at work. Take a part-time job in the evenings or on weekends. Start a business on the side. Send all the extra income to your emergency fund.

Sell something. Craigslist or eBay are great places to sell stuff you’re no longer really that into so you can give your emergency fund a quick transfusion.

Okay, your turn. If you had to tap your emergency fund, how did you restore it to its former glory?