Getting past the fear of spending emergency savings

You've worked hard to build an emergency fund and maybe a health savings account (HSA). However, when a situation like a home repair or an unexpected surgery arises, you may suddenly feel anxious about accessing the funds you've saved (for this very purpose). It's no wonder 60% of Americans feel uncomfortable with the amount of savings they have for an emergency.

Still, experts say that this discomfort shouldn't hold people back from using their savings when an actual emergency comes up.

"Use money for what you saved it for," said Benji Garcia of BOK Financial Advisors, who says he sees a lot of people who are savers struggle with spending money. "It's so firmly ingrained in them that they have to save, that even if they have a huge nest egg, they have a hard time breaking into it."

One reason may be the struggle to determine whether the situation feels like a big enough emergency to use hard-earned money and concern that there may be another bigger situation down the road.

"So much is out of our control. At some point, you're going to have an emergency, whether it's a medical crisis, a car breaking down or something else," said Garcia. "That's what that money is there for. You're lucky you have that money and worked hard to save it."

For many, knowing how long it took to save, then spending it in one quick swoop to pay for an emergency, feels like a gut punch. There's also the anxiety of having to start over to rebuild the now-depleted emergency fund.

Weigh the consequences of other payment methods
Garcia suggested considering the alternative. He often sees people falling into the trap of relying on a credit card instead.

"There's this psychology of ‘If I use my credit card, I don't have to tap into my emergency money.’ My advice would be to go ahead and use the funds you’ve saved,” he said. “Don't trick yourself into thinking it's better to pay off a credit card than to work hard to replenish your emergency fund. With a credit card, you'll end up paying interest rather than earning it on savings or getting the tax break on an HSA contribution and growth."

Family and friends influence money behavior
According to Garcia, there may also be psychosocial factors at play when it comes to money and how we use it.

"A lot is ingrained in us by our family. If you grew up in a frugal family, you tend to adopt those characteristics. On the flip side, if you grew up in a family living beyond their means, spending every penny that comes in, you likely will do that too," he said. "Society also plays a role. You look at what your friends do and social media, where 90% of it is advertising, trying to get you to spend your money."

To break out of the mindset of holding onto savings in an emergency, Garcia recommends three areas to consider:

1. Decide what constitutes an emergency: Make a list of situations you feel are justifiable “emergencies,” such as a car or home repair, dental work, a sick pet, a major medical issue or covering expenses after a job loss. Then, if one of the situations happens, you'll feel okay about pulling money from savings to cover it.

2. Have a plan to rebuild: Know what you'll need to do to replenish whatever savings you spend. Plan to increase the amount you've regularly contributed to your savings. If necessary, consider taking on a side hustle and redirecting that extra money back into your emergency savings.

3. Adjust your mindset: Think of your emergency fund as self-insurance to cover life's curveballs and be proud to spend it without penalty, especially considering the alternatives of using a credit card, which runs up debt and interest charges, or pulling out retirement investments, paying early withdrawal fees and losing compound interest and growth.

"We save money for a reason: to do certain things,” said Garcia. “We save money in an HSA for health crises and in an emergency fund for any other unexpected major expense. Use money for what you saved it for. We don't know if there will be another crisis down the road, but we do know we have this one right now.”

Say it out loud
He also suggested talking out the situation with a trusted friend or family member who you know is good with their money—or your financial advisor. "A lot of times you'll come to an answer by expressing it out loud. If you hear yourself saying, 'I'm afraid to use my emergency money for this emergency,' it gets it out of your head and forces you to look at it with some perspective. Suddenly, the fear that was inside your head doesn't make sense anymore."