It is tempting to use your emergency savings towards your holiday spending. You know the money is there, and you can always build up your emergency fund after the holidays, right? This is the equivalent of having junk food in the house (despite your intentions to eat better), getting really hungry, and eating it, then declaring that you will no longer allow junk food in the house starting next week. With both of these scenarios, it comes down to habits. It’s bad to make it a habit to touch your emergency fund for non-emergencies, just like it’s bad to keep junk food in the house when you are trying to eat better. Discipline takes time to build, but once you have it, you will find it easier to stick to your goals.
With holiday shopping fully underway, you hopefully came up with a budget to fund your gift giving by now. Whether you’ve been saving for the past few months or you’ve made adjustments to other parts of your budget (such as reducing how much money you put towards eating out), it’s important to stick to the pre-determined amount you decided prior to the holiday season.
Your emergency savings should be three to six months’ worth of expenses. Emergencies are usually stressful times too, but having the cash to take care of a broken refrigerator or car repair makes it a lot easier to sleep at night because you didn’t have to go into credit card debt. Christmas shopping is not an emergency. If you rely on this money for your shopping, you are likely to rely on it for other non-essentials. Continuing this bad habit will deplete your emergency savings and undo the discipline you formed to get that money saved in the first place.
If you didn’t stick to a budget, bought presents on the credit card that you can’t pay off in full, or went through your emergency fund for your holiday shopping, and you want to get better with your finances for next year, your local Extension Family and Consumer Sciences agent can help. When you are ready to commit to forming good habits, reach out to your local office and see what classes they offer or ask about one-on-one financial coaching.