Use it only for emergencies
"An emergency fund is for the unexpected," says Carrie Coghill of Coghill Investment Strategies in Pittsburgh. "For example, appliances that stop working, getting laid off from a job, a long illness or an accident. You use an emergency fund for any expense you cannot foresee."
One of the most common problems people have with emergency funds is forgetting to plan for one-time expenses each year, Coghill says.
"People budget to save and put away an emergency fund, then they forget to budget for an annual insurance expense or car expenses, etc.," she says. "You can foresee your car insurance expense next November, for example, so it is not an emergency."
One way to avoid using the fund for non-emergencies is to make access to it somewhat difficult. "Do not get access to it via debit card," Smith says. "And if you are issued a checkbook, hide it."