When Is It Okay To Dip Into Your Savings?

If you’re lucky enough to be able to sacrifice some of your income to put in savings, you might not necessarily be thinking about what the money will one day be used for.  If you’re sitting there reading this and you do have money in savings, do you already have it earmarked for something? Perhaps you’re saving towards something you need or want to buy, or maybe you’re just saving for a rainy day.

In either of these cases, there will come a time when you need to dip into your savings. Whether it is because you’ve reached the savings goal you set yourself, or you’ve woken up to a particularly rainy day, you’ll need to make the assessment on whether or not it is time to dip into your savings.Dive in

 Reaching a savings goal you’ve set yourself requires a lot of hard work and discipline, and you should of course congratulate and reward yourself by spending the money on whatever you had your eye on.  The most important part now is to make your hard work is fairly rewarded, and that you get the best deal possible for your hard-earned savings.

If you’ve been saving for a while you should do your homework and find out if the prices are still the same as they were when you started saving. Use the web to compare prices from different companies to get yourself the best possible deal.  Whether it’s flights or some new home furnishings, these days there are more companies than ever vying for your cash, so you should use this to your advantage.

If you weren’t saving for any particular purchase, then you should think carefully about using your savings to pay for something. Generally speaking, you should reserve them for emergencies like unexpected auto repair bills which you wouldn’t normally have the disposable cash to pay for.

Stay on the side

You’ve been disciplined enough to squirrel away all that cash, then it would be the worst thing in the world to go blowing it on something undeserving of your savings.

Think carefully about how much you need the item or service you’re about to spend your savings on – can you do without it, and could the money be better spent elsewhere?

If it’s a particular product you’ve got your eye on, check out some reviews online to see if it is worth your money – it’d be a real shame to waste the money you worked so hard to accumulate on an inferior product.

Dip your toe in

If you’ve been scrimping and saving so that you can pay for a big expense like a vacation, refurbishments to your home or something else you’ve had your eye on, then you probably can’t wait to withdraw your savings and gladly splash the cash.  owever, don’t be too hasty to withdraw the cash, as there may be circumstances where it might benefit you to pay in other ways.

Flights, for example, might be better paid for with a rewards credit card which offers cash-back or airmiles on purchases. If you’re going to spend a large amount of money, you’ll want to get as much in return as possible. In that case you may be better off booking the flights on the card and then withdrawing your savings to pay of the card’s balance.

This awesomely written post was brought to you by the lovely people at Money Supermarket. They help you compare all different kinds of services including insurance, credit cards, and a bunch of other stuff.

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7 thoughts on “When Is It Okay To Dip Into Your Savings?

  • I feel I accomplished an important goal when I put money in my retirement savings. I set up the payroll deduction at the beginning of the year, but I enjoy watching it grow. I know it will feel really good when I use the funds in retirement.

  • It sure is a tough decision at times. I personally hate parting with money. It’s interesting but when I had to buy a car 2 years ago and had some cash, I just couldn’t get myself to write a check over $10K, so I bought a 5 year old car for $8 instead. Mentality does really change when you part with a lot of money up front vs doing a payment plan.

  • I have a couple of different savings account for exactly these reasons. One account is for large purchases, like furniture and vacations. Another account is for my ER fund and a third account, which I don’t really count, is my “slush” fund since my income is erratic. I tend not to dip into my ER fund at all and only touch my large purchase fund when it’s time to purchase household items. This system seems to work for me.

  • I agree about the blog being written so well! Also the mentions on type of savings. All of us do save with a specific aim for a purchase or save for emergency. When there is a fortunate circumstance like not having an emergency, the tips given on how to spend/invest is truly fantastic and practical.

  • I like having seperate buckets, it makes things much easier.

    For example, I have a Kilimanjaro fund (er.. it used to be my pet insurance fund but I turned it into my travel fund, how reckless!), a big savings fund (for big purchases), and my regular savings/ chequing.

  • If it’s your emergency savings, the answer is only for a real emergency. If it’s retirement savings, then only for retirement. But if it’s a general savings account and every other account is well funded, no debt, etc, then it’s okay.

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