We often call savings a “rainy day fund.” But when that rainy day arrives, it can still feel terrible. There’s a lot of pride that comes with building up a savings fund, and having to make use of it is a blow to that pride. 

So how do you know when it’s time to dip into savings? And how can you do it best?‍

When to use your savings fund?

‍Let’s say the obvious first: your savings fund is there for when a large unexpected expense happens that you can’t cover with your daily account. This means that between now and your next payday, all your planned expenses, as well as this big one, add up to more than you have in your bank account. 

But it doesn’t necessarily have to be that drastic. If, for example, you like to have at least one month’s rent on your daily bank account, and your expense would also cause you to dip below that amount, going into savings can make sense as well. 

So you dip into savings when an expense would cause your bank account to slip below an acceptable level. Be careful here. It’s easy to get used to a certain balance in your checking account and cover up financial damage by topping it up from your savings account. Come up with a logical number and explain to yourself why that level is acceptable for you. 

How to rebuild your savings after the rainy day 

Hopefully, the expense that’s caused you to dip into savings is a one-time affair, and not something more permanent, like prolonged unemployment, a loss of income or a recurring expense. In that case, you need a deeper recalibration of your finances, and rebuilding your savings might not be your biggest priority. 

If you are lucky enough that your expense was a unique occurrence, you should focus your energy on how to rebuild your savings. 

The best way to do this is to divide your expense into 6 monthly payments. Each month, on top of what you’re already putting into your savings, you put in one of those payments. That way, in six months, you’ve not only repaid your expense, but you haven’t fallen behind on your savings goal either. 

This might not be easy. It might even seriously mean readjusting your spending categories for the next few months, and cutting back where you can. But the point is to lessen the pain of the expense over a longer period of time. Think of it as a loan from yourself to yourself but with no interest. Paying back loans is never fun. But this way at least you’re taking care of your financial future. 

Of course, if that’s not possible, you can also just pay in your usual amount into savings. It will take you time to get back to your previous level of savings. Your quality of life is also important, and you shouldn’t have to prolong the stress of your expense over several months if paying it back will severely impact your mental health and happiness.