Hello, I recently used portions of my emergency fund (EF) on two things: an unexpected expense (car repairs) and investing (took advantage of a dip in a stock I am following). My question is how do I show these withdrawals in my budget? I have a set budget and track all my expenses each month. I usually show my monthly auto deposit into the EF, but now I’m confused about showing the withdrawal. Should I treat it as income or just not show the expense/investment in my budget? Any additional tips or strategies would also be appreciated. Thank you!
You can show a negative transaction in your emergency fund and then increase your income for that month accordingly. This way, you track the expense while also lowering your emergency fund amount.
I write the withdrawal in my income column and lower the EF amount by the same, then record the expenses. This helps in making decisions about what sinking funds you may need for next year.
Just record the two expenses as expenses. Your EF is from previous income, so when you draw down for unexpected costs, treat them as regular expenses in that budget period.
Treat it like any other expense. The emergency fund isn’t new money; it’s set aside savings. Just list the car repair and investment as regular expenses.
I use a budget tracker with two tiers. I transfer from the EF to the appropriate category for the emergency expense, which helps with future planning.
You should have a target number for your EF. When you hit that number, treat the EF differently in your budget. It’s not for speculative investments—keep it strictly for emergencies.
Track where you spent any EF withdrawals so you can categorize them clearly. Don’t count EF withdrawals as income to keep your spending plan accurate.
Consider creating a new budget category called ‘EF contribution’ to help replenish your emergency fund. Transfer funds into your EF at the end of the month if you didn’t use any from that category.