The Unusual Way We Safeguard Our Emergency Fund

Building an emergency fund is Dave Ramsey’s Baby Step 1 for a reason! It helps you to pay off debt when you don’t have to use a credit card for an emergency. However, it can be really tempting to spend that money. I have tried every way to protect my emergency fund, and I have finally found what works for me—and it can work for you, too!

The Unusual Way We Safeguard Our Emergency Fund

I have a confession to make. 

My husband and I used to cheat on our budget.  All. The. Time.  We would work really hard to save up a $1,000 emergency fund just to find “emergencies” around every corner.  But they weren’t emergencies.  They were wants.  Desires.  Things that weren’t in the budget, but we just “had” to have…and hey, at least spending savings is better than putting it on a credit card…right?

But that isn’t what an emergency fund is for.

An emergency fund is supposed to keep you from having to put surprise expenses on a credit card.  It is a safety net that must be in place if you want to be successful at paying off debt—how can you expect to pay down any debt if you keep accumulating debt?  And it is the first thing you need if you want to stop living paycheck to paycheck. 

An emergency savings fund is the backbone of being financially stable.  There is a reason it is Dave Ramsey’s baby step 1—the money is useful!

When I would spend some of my emergency fund, I would call it “cheating”.  And it is just like cheating on a diet—one cookie can easily turn into a cheat meal, which then turns into a cheat week, then a cheat month, and finally the diet is out the window.  So it is with spending your emergency savings.  One date night or one cup of coffee tends to open the flood gates, and before you know it, your emergency fund is gone.

This has happened to us! 

But I am determined to make sure it never happens again.  So we have started a system that makes it really hard to spend our emergency fund on things that aren’t actually an emergency.  Now, we do these 3 things to make sure we keep that fund for a rainy day, instead of letting it burn a hole in our pocket. 

We keep the emergency fund in a different bank than our regular accounts.

We used to use one bank for our joint checking account, our individual checking accounts, and our savings account. But we learned the hard way that we could not include our emergency fund.

It is just all too easy to transfer money from the emergency account to the checking account when you use the same bank for everything.  It only takes about 20 seconds using an app on my phone, making it way too simple, easy, and convenient to spend the money we worked so hard to save. 

So instead, we opened an account at a completely different bank.  It takes 2-3 business days to transfer money to our normal bank, which is plenty of time to discourage transferring money out of the account unless it is for a true emergency. 

Making our emergency savings harder to access by putting it in a different bank has been a really good way to make sure that we do not spend the money. 


Our emergency fund is in a savings account.

That’s right, we don’t put our emergency savings into a checking account. 

We don’t do it to earn interest—we do it because at our bank, savings accounts have withdrawal frequency limits.

That means I can’t just take the card associated with our emergency fund account and swipe it willy-nilly to get coffee in the morning, grab lunch after running errands, and do some online shopping after the baby is asleep.  Our account can only have 6 withdrawals per month, which means that if I slip up and start spending the money, it will stop me after 6 transactions.

Sure, you can really deplete your savings in 6 transactions if you try, but I find that just having the withdrawal limit forces me to be worried about using my savings account.  I want to make sure I have some withdrawals left for any real emergencies that pop up, after all—talk about an effective spending deterrent.

We label the card. 

The bank issued us a card that we have for our emergency fund account, which I had mixed feelings about at first.

I didn’t want to have the card with me, because then the money was easily accessible, even with the withdrawal limits.   However, if we can’t get to our money at all in a real emergency, what is the point of having emergency savings?

It was a real dilemma, but I found the solution—we label our card!   It says “EMERGENCY SAVINGS”  in big bold red sharpie across the face of the card, which is extremely effective in stopping me from using it.

It is embarrassing to use a card that is clearly labeled as EMERGENCY SAVINGS when you are checking out at Target, the grocery store, or a restaurant.  Can you imagine handing that card to your waitress?   I would be mortified, self-conscious, and look like a financial hot mess.

And that is the whole point.  That is why this is a really effective method to make sure you don’t spend your savings!  I cannot bring myself to use the card linked to my emergency fund because I made it as embarrassing as possible—and it works!

But in a real emergency, it won’t be embarrassing.  If you need to pay for a tow truck, or a trip to the emergency room, it would be no problem to pull out your emergency savings card.  Why?  Because this is what your emergency fund is for!   

If the cashier were to ask about the card when you are paying for a real emergency, just say “Yup, having an emergency fund has made it so we don’t have to use credit, we have cash on hand for the unexpected, and it allows us to make extra payments on our car and house without worrying.”  Because there is nothing embarrassing about having your finances squared away when a rainy day comes along.

It is a little unorthodox, perhaps, but we have needed a few extra safeguards to make sure we do not spend our emergency fund.  We keep the money in a limited withdrawal savings account in a different bank than our checking to make it difficult to transfer money and to keep us from going on a spending spree.  We also label our card so that even if we are tempted to use our emergency savings just to go over our budget on something unnecessary, we are too embarrassed to do it.   

Now that we are actually holding onto our savings, it is more possible than ever to get our debt snowball rolling and to pay off our car years early!  It is absolutely worth it!

What tricks have you used to avoid spending your emergency fund?

This post may contain affiliate links.

8 Comments

  1. Ernie Bartholomew

    The Millionaire Next Door is one of my favorite recommendations. Several years old, but still very sound.

  2. Jess

    We do the same thing. Our savings is at a credit union which we don’t bank at for purposes of checking. We also asked for them not to issue us a debit card for that account and if we need to access the money, we physically have to plan to go into the bank to pull the funds. We don’t have the account tied to our other bank accounts as a way to keep us discouraged from trying to access the money we have in there. It’s been really helpful.

  3. I agree with you. Excellent tips! It’s always better to be safe than sorry when it comes to saving, so it’s important to put money aside and save for things like emergencies and future expenses in whichever way works best for you. Thanks so much for sharing your advice on building a good financial foundation!

  4. Christine

    I have my emergency fund in a money market that only allows 6 withdrawals too. My concern, living in Florida and having been through 3 hurricanes, when there is no electricity, and cell towers are down, no one, even the banks have access to money and if your shingles blow off or a tree falls on your house and you need that money you are in trouble. I have tried having a cash fund kept at home but that’s too easy to dip into. Any ideas on how to get to that fund when all access to that account fails?

    • That’s a really hard one. We actually have a debit card now for our savings account, which keeps it available when we really need it. It is in a different bank than our checking accounts, but having a card on hand is helpful in emergencies as long as you aren’t tempted to use it for non-emergency spending.

  5. I also keep it in a different bank, but I also have a goal which really helps. If I don’t use that money on emergencies, it will be added to my kid’s college fund in 15 years. When you feel like you are robbing your kid, it filters out a LOT of “emergencies”.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge