When to Use Your Emergency Fund

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You can never be sure what life will throw your way, but you can at least financially prepare for the unexpected by building an emergency fund. These savings, which should be kept separate from your ordinary savings, are ideally sufficient to cover between three and six months of living expenses. If you have a pay cut, you lose your job, or have a major unplanned expense, your emergency savings serve as a life raft to rescue you and you won’t have to use a credit card.

Having some direction on when you should use your emergency fund—and when you shouldn’t use it—will allow you to make the best use of your savings.

What You Shouldn’t Spend Your Emergency Fund On 

Sure, your emergency fund is technically your money. But once you’ve designated it for emergencies, you owe it to yourself to spend it only when it’s absolutely necessary.

Periodic, Expected Expenses

Infrequent expenses can sneak up on you and sometimes feel like a legitimate emergency. However, even annual bills and routine spending can—and should—be planned for along with your regular monthly expenses. As you’re building your monthly budget, consider any quarterly, semi-annual, or annual bills coming due in the next few months. For example, you should always plan for:

  • Holiday and birthday gifts
  • Annual car registration
  • Back to school shopping
  • Property or income taxes


Not every expected expense has a date to let you know it’s coming. Keep a separate savings for unpredictable incidentals like routine car maintenance, minor home repairs, medical bill copays, and seasonal clothing shopping for kids.

Non-Essential Spending

Before touching your emergency fund, always ask whether the money is going toward something essential for living. Leisure spending should always be funded with your regular wages, side income, or separate savings. No matter how urgent it may feel, your emergency fund is off-limits for things like:

  • Phone upgrade
  • Wardrobe upgrade
  • Vacations
  • A good sale
  • Someone else’s emergency

Large Financial Goals

Building an emergency fund is a financial goal itself, not a source of funding for another financial goal. If you clear out your emergency savings for a major expense, you’ll have nothing left to cover you for a rainy day, and what seemed like a sound financial decision at the time could turn out to be a major mistake. That means you shouldn’t use your emergency fund for:

  • Down payments for a house or car
  • Business startup costs
  • Early retirement


Confusing wants and needs is an easy way to blow your safety net on non-essential spending. Remember, needs are things you need to survive, keep your job, or protect your assets; Wants are upgrades to your lifestyle.

What Your Emergency Fund Is Really For

Of course, sometimes you can fall on the opposite end of the spectrum, completely afraid to touch your emergency fund, even when it’s truly necessary. As a guideline, you can tap into your emergency savings for unexpected, necessary, and urgent spending. That includes:

  • Living expenses after a job loss or pay cut
  • Major car repairs after an accident
  • Emergency home repairs
  • Emergency, necessary medical expenses
  • Unexpected, essential travel

These are the exact types of situations you built the emergency fund to handle.

“If it becomes necessary to use the emergency fund, the usage should be for necessary expenses related to housing, food, and transportation,” recommends Jason Eppenger, Alabama Market President at Citizens Trust Bank. “It’s important to remember that if the situation is so dire to the point of tapping your emergency fund, it is necessary to adjust spending habits to allow for the maximum utilization of those funds.”


Even for true emergencies, exploring other options before dipping into your emergency fund can help you preserve your savings. That includes eliminating extra spending and contacting billers for hardship options.

Rebuild Your Fund Afterward

If you’ve had to use your emergency fund, replenishing it is key to making sure you have access to savings the next time you’re in need. After experiencing a financial setback, you might even decide to save up a little more than the oft-advised six-months of living expenses.

Maintaining scaled-back monthly spending can leave some room in your budget to begin rebuilding your emergency fund. If you need to, it’s ok to put your other financial goals on hold for a few months while you get your safety net back to a comfortable level.

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  1. Consumer Financial Protection Bureau. "An Essential Guide to Building an Emergency Fund."

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