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Emergency funds protect you financially when you face sudden or unexpected expenses that everyday funds won't cover. People often need extra money for financial goals or needs, but only some things constitute an emergency.

What Financial Situations Do Emergency Funds Cover?

Situations that would be considered emergencies include:

  • Job loss
  • Decreased income
  • Emergency medical expenses
  • Urgent home repairs
  • Emergency car repairs
  • Essential travel
  • Emergency pet care

Whether facing a specific hardship or a financial situation change over time, there are often indicators that let us know it's time to start thinking about pulling funds from our emergency stash.

When Is It Time to Use Your Emergency Fund?

Below are five signs it's time to dip into your emergency fund.

1. Your Income No Longer Covers the Bills

city layoffs newspaper


Job loss, wage cuts, or reduced hours at work can lead to decreased income. Making less money can create an impossible situation trying to cover bills with the money coming into your checking account.

You can stretch your checking account balance for a time, but eventually, it will dwindle as less money comes in. The last thing you want to do is let your balance drop until you risk bleeding it dry or overdrawing on the account.

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Consider your situation and whether it will change shortly to determine if it makes sense to withdraw from your savings to make ends meet.

2. You've Already Cut Out Nonessential Spending

Cutting out nonessential spending can create more margin and help you stretch out your monthly budget. If you're already running on a bare budget and still have significant financial needs, you may need to rely on emergency savings, at least for a while.

Look over your expenses and spending to ensure you've cut out all spending outside of immediate and essential needs. If you're still short on funds, it could be time to withdraw from your emergency fund.

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3. You Need to Defer Bill Payments

Consider tapping into emergency funds if you're getting behind on bills to the point that it's time to contact creditors to defer bill payments.

Through the pandemic, many companies changed how they handled financial hardship, offering more options for customers facing financial struggles. Today, you may be able to temporarily pause or reduce payments on loans, credit cards and other bill payments, as well as rent. You may also avoid late fees and other penalties and protect your credit.

If you're still struggling after getting adjustments to your payments, use your emergency fund.

4. You Have Urgent or Unexpected Needs

person looking under the hood


Emergencies are a part of life. It's not a matter of whether they will happen but when. As much as you want to avoid using emergency funds, you may need to if you face a pressing financial need. Some emergencies can be handled over time using money in your checking account, but others may require you to tap your emergency savings quickly to remedy the situation.

Unexpected or urgent financial emergencies may include:

  • An unplanned car repair that helps you avoid missing work
  • A life-saving emergency surgery
  • An emergency home repair to keep your family safe and avoid further damage
  • Paying off a bill to avoid having your power or water turned off

Even careful planning can leave you underfunded when unexpected emergencies strike. Use emergency funds if they can help cover urgent financial needs.

5. You Have Serious Medical Needs

If you have serious medical needs that require ongoing care and treatment, you may need to use emergency funds to help cover costs. Surgeries, unexpected or not, can cost thousands of dollars or more, especially if uninsured. A medical condition or recovery time that leaves you unable to work only compounds your financial need.

Some healthcare providers will work with you to create a repayment plan to pay off medical debt over time, but you may still need to tap into your savings to cover these expenses.

When Not to Use Your Emergency Fund

man with mobile phone


There's a difference between a financial emergency and needing money to cover life goals or specific life events. Even needing money to cover an expense doesn't make it an emergency.

The following expenses aren't considered emergencies and shouldn't rely on emergency funds to cover:

  • Back-to-school shopping or big sales
  • Birthday presents
  • Cosmetic medical procedures
  • Down payment on a house
  • Holiday gifts
  • Income taxes
  • Mobile phone upgrades
  • Property taxes
  • Retirement
  • Starting a business

Consider whether your financial need is for survival or if it's something you can live without or save up for over time. Keeping your emergency fund intact for real emergencies helps ensure there's money available when you need it the most.

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Stretching Your Emergency Fund

Even when facing a dire financial crisis, there are often ways to budget your emergency fund to last longer. Here are actions to consider taking if you're facing financial hardship.

Apply for Unemployment

If you or your spouse loses their job, apply for unemployment benefits immediately. Applying for benefits can take time, so starting as soon as possible is better than waiting to see if you can land a job quickly.

Talk to Creditors

Lenders and creditors may offer payment forbearance or deferment if you're facing specific financial difficulties. Generally, deferring payment will cause interest to accrue. Work with your creditors on a payment pause or repayment plan that satisfies both parties.

Tap Into Community Resources

Look for local charities or food banks that can provide resources or food that will help you leave emergency savings untouched for food or essentials. Search for nonprofits that assist with bills or housing.

Work a Second Job Part-Time

Consider getting a part-time job or side hustle to supplement income from your full-time job. Finding ways to make additional income can help bridge gaps to cover bills without withdrawing money from your emergency fund.

Replenishing Your Emergency Fund

Only use your emergency fund when necessary and stop using it when you've moved beyond whatever hardship you faced. Continuing to use money earmarked for emergencies after the fact can cause those funds to dry up quicker.

After you've recovered from hardship, work to rebuild your emergency fund, so it's full the next time you need it. Follow these tips to rebuild your emergency fund.

Assess Your Fund

After using your fund, gauge whether you had enough saved to cover past needs or if you need to ramp up your fund to ensure there's enough for the next emergency. Consider saving more if three or six months' worth of living expenses wasn't enough.

Automate Savings

Your emergency fund will only grow if you make it happen. One of the best ways to ensure you're saving money is to set up automatic transfers from your checking account to your emergency savings until you've replenished the account.

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Avoid Lifestyle Creep

If you cut out unnecessary spending during hardship, consider keeping a lean budget to maximize your savings.


Kevin Payne

Kevin Payne is a personal finance, credit card, and travel writer. He is the family travel and budget expert behind Kevin lives in Cleveland, Ohio, with his wife and four kids. His work has appeared on several websites, including FinanceBuzz, Credit Karma, Millennial Money, Club Thrifty, Student Loan Planner and Slickdeals.