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In the last month, millions of people’s financial outlooks have been turned upside down as a result of the Coronavirus outbreak due to a lack of emergency funds. Thousands of businesses across the country have shut their doors, being deemed, non-essential, displacing millions of workers. It has been reported that a record 6.6 million Americans applied for unemployment benefits since the middle of March. It’s resulted in the largest jump in new jobless claims in history. 

To counter the devastating impact this could have on the economy, the Senate passed the largest relief package in history, to assist struggling workers and businesses, as well as provide additional benefits to those who have been laid off. As a result, most Americans will receive $1,200 in aid from the government.

By definition, the current situation that has been brought about by the Coronavirus pandemic qualifies as a national emergency, yet for millions of Americans it has also become a financial emergency, requiring immediate action, so today I want to address how to determine if you should utilize your emergency fund.


It’s standard for most financial experts to recommend keeping three to six months’ worth of living expenses in a dedicated, highly liquid account to account for emergency funds. Of course, this amount will vary depending on individual circumstances, but the reasons are the same: to account for some kind of unforeseen financial development in a person’s life. 

For most people, accumulating enough savings to cover an entire 3-6 months of living expenses can take years, so rightly, considering whether something should be deemed an ‘emergency’ should be thought out. An emergency fund is there for a reason: to have the necessary funds to cover a truly unexpected financial development without going into debt. Some of the most common situations that would warrant tapping into your emergency savings are: 

  • An unexpected medical emergency - either yours or a relative you care for 
  • A reduction or loss of income from being laid off or an illness/injury that prevents you from working
  • An unforeseen major home repair requiring immediate attention
  • An unexpected replacement or repair of your vehicle if it’s your primary transportation

Without a dedicated emergency fund, most people are forced to go into heavy debt, which continues to grow as a result of carrying large balances and incurring interest every month. Saving yourself from that kind of scenario is exactly the reason for having emergency savings, so if and when a situation arises, you’re able to handle it comfortably. 


Let’s consider another example - bills that we may get on a regular or semi-regular basis, yet can’t justifiably be considered ‘emergencies.’ 

  • Home Repairs: a home maintenance emergency repair that is unexpected, necessary, and major could be considered an emergency. Remodeling a bathroom or kitchen, or adding a deck to the backyard would not qualify for reasons to dip into your emergency fund.
  • Car Repairs: an unexpected replacement or major repair of your car could be considered an emergency if it’s your only or primary means of transportation. Regular maintenance such as oil changes, or brake, and tire replacement should not be reasons to use your emergency savings. Likewise, if the vehicle is simply used sparingly or as a matter of convenience, you should think twice about utilizing emergency funds on it.


Planning is the key to paying for these kinds of expenses that are inconvenient, but necessary. If you rely on a vehicle, you know that it will require occasional maintenance and upkeep. Likewise, if you’re a homeowner, you understand that you’ll need to pay for normal maintenance such as replacing a washer or dryer or fixing a leaky faucet. Planning for these types of expenses is the key to not tapping your emergency savings and also avoiding going into debt to pay for them. 

The best way to do this is to simply set up dedicated savings accounts for them - separate from your emergency fund. Using the car and home example, you may set up a savings account for each and keep $500 in each, to cover those types of necessary, but non-emergency expenses. This way, by planning ahead, those kinds of costs never feel like an emergency and you won’t even affect your monthly budgeting either. 


We are living through an unprecedented time right now with the way the Coronavirus outbreak has affected life all over the world. Much of this is financial with so many people suddenly facing unemployment. Of course, loss of income due to job loss would certainly warrant using your emergency fund, but I’d like to offer some additional ideas and resources, so you can hold off for as long as possible from dipping into those savings.

  • Almost every American will be receiving some aid from the government within weeks -- most likely $1,200, depending on individual circumstances. 
  • Losing your job due to the Coronavirus will likely qualify you for unemployment benefits as well. This can provide you anywhere from $40-$450 per week. 
  • However, with the new Coronavirus Aid, Relief, and Economic Security Act, unemployment benefits will be expanded and workers will be paid an additional $600 per week on top of what they would normally receive for up to four months until July 31. Once that additional federal assistance is exhausted, they will continue to receive their normal benefit amount, administered by their state.
  • The relief package will also allow workers to receive benefits for an additional 13 weeks, providing up to 39 weeks (or nearly 10 months) of financial assistance in total.

If your income is impacted by the Coronavirus, try exhausting all of these resources before dipping into your emergency fund. If you do end up having to utilize it, try to tighten your budget and limit spending as much as possible, and remember your emergency savings were created for times like this, so don’t go ahead and use it and just work on replenishing it when life normalizes again.

We at Financial Rescue can also help you with our debt relief solutions. We will help you settle your debts, cut down the total amount you owe, and consolidate your debts into a single low payment. This is your chance to take on your debt and start building your emergency fund! Contact us today to learn more.