When is it Right to Use Your Emergency Fund?


It’s impossible to predict what life may throw your way but it’s important that you are financially prepared to handle the situations. An emergency fund should be maintained separately from your ordinary savings and should be sufficient to cover 3 to 6 months of your living expenses. This includes rent, utility bills, personal expenses, and medical bills. If you lose your job unexpectedly or your salary was cut, or have an unexpected medical emergency then the emergency fund can save you without the need for a loan or a credit card.

What to spend your emergency fund on?

The money in the emergency fund is yours technically but once you have assigned that amount to the emergency fund, you owe it to yourself to not spend it on unnecessary things. Here are some scenarios where using your emergency fund would be a good idea.

  • Unemployment

With recession looming over all our heads, unemployment is one of the biggest financial emergencies. If you have lost your job and are unable to find employment over some time, using your emergency fund to manage daily living expenses is ok. If your emergency fund isn’t sufficient, then you can search for emergency loans online.

  • Pay cut

If you are losing hours at your job or your salary is getting reduced, and need some help to close the gap then you can use your emergency fund in moderation. Additionally, if you are looking to drop some hours at work to pursue education, or due to any other personal reason, then using the emergency fund to manage things is acceptable. You can use your reduced income on all the daily necessities and use some amount from your fund to cover other expenses.

  • Medical emergency

Unexpected medical bills are a big source of anxiety and financial crisis. Even if you have health insurance, the bills can end up in big amounts or you might need a co-pay to reach the deductible. In such cases, it makes sense to use your emergency fund. Although to keep an eye on how much you take out of your fund, you should ask your healthcare provider if they will allow you to set up a monthly payment plan.

  • Emergency repairs

Emergency home repairs such as gas leakage, or a broken washing machine, may require you to pay a technician or get a new appliance altogether. Additionally, if you are dependent on your vehicle to get to work, then using the emergency fund on repairs is a good option.

How to reduce what you take out from an emergency fund

While facing an unexpected medical bill, home repair, or any other financial crisis, it’s important to make sure you don’t empty out your emergency fund. There are a few things to consider if you want to stretch your emergency savings to last longer.

  • Unemployment benefits

If you have lost your job, then immediately apply for unemployment benefits. They might take a little time to materialize, which is why you should apply as soon as possible, but they can help you reduce the amount you take out from your fund.

  • Community resources

Community resources can be a great place to turn to when you need financial help. A lot of cities have food banks, housing shelters, and emergency utility services that can reduce your need to use the emergency fund on groceries, utilities, and other necessities.

  • Gig economy

If you have lost your job or your pay has been cut, side gigs may be able to help you out a little. The extra income can be spent on essentials. It wouldn’t be a big payment but it will still help you use your emergency fund less.


Once your financial situation is stable, it’s important that you work on replenishing your emergency fund to ensure you are prepared for the future. After the financial setbacks, you might even consider saving a bit more this time if your income allows it. Maintaining your monthly expenses can help you add some more bucks to your savings pile along with the emergency fund. Don’t be afraid of cutting down on a few expenses while you are rebuilding your emergency fund.

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