Knowing when to use the Emergency Fund

Having an emergency fund is a wise choice, especially in today’s changing economy. Sometimes, it is difficult to know exactly when to use your emergency fund and it is too easy to use it on things that don’t really constitute a true emergency. So, when is the appropriate time to dip into the emergency fund? This can be slightly different from person to person, but in general, there are certain things that really are necessities and particular times that the emergency fund is acceptable to use.

*Job Loss

With unemployment at all time highs in most states, there are many people who are, or may soon be, facing the loss of a job unexpectedly. Hopefully, you will be receiving unemployment benefits that will get you through this time, but it can take some time to process your application and begin to actually receive your payments. Your emergency fund will come in handy during this interval. If you aren’t going to be getting unemployment benefits, you may need to use your emergency fund until you can find another source of income.

*Housing Needs

Housing is most people’s largest expenditures every month. There may be times when paying the mortgage or the rent is impossible with your regular earnings. If this is a regular occurrence, it is best that you look for more affordable housing, but if it is a one time event that has caused the problem with meeting your housing costs, your emergency fund can pull you through.


Food is essential for life, so this is a necessity that constitutes a use of the emergency fund if you don’t have any. However, this doesn’t mean that you should make a trip to Red Lobster for your food. Go to the grocery store and do some smart shopping so that you can keep as much money in your emergency fund as possible. You never know when you’ll need it next!

*Essential Utilities

There are some utilities that are essentials, such as water and electricity, and keeping these on is very important. If you are going to have either your water or your electricity shut off, you will need to pay them from your emergency fund. Some utilities aren’t essential, though. For example, your cable bill isn’t a needed expense. Phone and internet service can go either way. If you work from home and need these in order to make your income, you should definitely keep them in working order. If not, they aren’t true emergencies.

*Children’s Needs

If you have children, they are going to have certain needs that must be met by you. When the children need something, this is a good time to use your emergency fund. Be sure that you distinguish between a need and a want, though. For instance, the newest toy on the market is not a need, but school supplies are.

Having an emergency fund is extremely important, especially in these changing economic times. It is suggested that every household have a savings that will cover at least three months of their bills and expenses. Doing this will take a lot of fear and stress off if something does come up that makes an emergency fund necessary to use.