Use the Emergency Fund or Not?

I have a friend who recently lost her job. She’s not the only income earner in the household, but she does contribute a good bit to the family’s finances. Fortunately, she has a three month emergency fund saved up. However, her proposed management of that fund leaves me scratching my head.

On the day she lost her job she came to me and said, “Well, that’s it. We’re going to have to hit the emergency fund now for our expenses.”

I asked if things were already that bad.

“Well, no, but this is an emergency so it’s time to tap the fund.”

“Have you cut your expenses back so that maybe you can live mostly on your husband’s income for


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13 Responses to Use the Emergency Fund or Not?

  1. You are right. She is wrong.

    Unless you already have a job lined up, cutting expenses immediately etc is the only sensible financial response to losing your primary source of income.

  2. Matt says:

    Who knows why people make the choices they do. If she has kids that probably factors into it. Seems strange that someone with enough discipline and good sense to save up three months worth of expenses would then tap into it at the first sign of trouble – thats why I say something else has to be going on. I don’t think we know the whole story.

  3. Aryn says:

    My husband went on disability recently, which reduced his income to a level slightly higher than unemployment benefits. We still haven’t touched our emergency fund. We also found that our expenses dropped dramatically while he’s been home, without even trying.

  4. bb says:

    She will know three months later.

  5. KellyB says:

    Agreed with all other posters. I lost my job last year, just *knew* I’d get another quickly, but it took 7 long months. What a huge surprise! But I managed through it WITHOUT touching a cent of my E-fund (in fact savings actually grew, thanks to a severence package and a tax refund!). Luckily I didn’t have to cut cable, etc., but I would have if needed. I did downsize categories where I could, such as entertainment expenses, eating out, etc. Didn’t buy anything that wasn’t a necessity, that was a big change too. So it can (and SHOULD) be done. What will she do after the 3 months and she still doesn’t have work???

  6. Theresa says:

    My husband has been laid off for 6 months now and luckily we haven’t had to touch the emergency fund. We cut down some expenses and lived off of my income.

  7. I definitely think you are correct. I think your friend’s attitude could spring from several different things. 1. She just sees the world differently (like you said). 2. The reality of this economy is not real to her, because other than this layoff it hasn’t touched her personally. 3. Maybe it wasn’t that difficult for her to save her emergency fund, so she’s less emotionally attached than most of us would be after socking away 3 months of expenses. For her sake, I hope her optimism is warranted.

  8. snshijuptr says:

    I would just hate the thought of derailing my other savings goals to replenish the efund. When my husband loses his job this summer we will try everything to stay away from the efund.

  9. Diane says:

    I’m with you… I’d cut whatever extra expenses I could and get whatever part-time work I could before tapping into the emergency fund. Better to cut back now than to end up in a REAL emergency when the fund runs out in 3 months and she hasn’t found a job yet! Even if she finds a job in 3 months, the thought of using up the emergency fund and having to start over is too scary…

  10. Guy G. says:


    It’s funny how someone will take so long and work so hard to build up a decent emergency fund and then go and spend it up without a second thought. You’re right to say that tips on budgeting that help her reduce her current expenses would really help her not blow through the emergency fund. It would at least slow down the process.

    They should at least put a few things on hold, like the cable, gym memberships and other elective expenses.

    Thanks for sharing,

  11. Isabelle says:

    When people use words like ’emergency’ we all assume their definition is the same as ours – it isn’t. It’s like ‘rich’, ‘poor’, ‘hard up’, ‘essential spending’ – I know what I mean when I hear these words and it won’t be the same for you.

    So, this woman’s definition of ’emergency’ is not that of most of us on here!

  12. Gail says:

    I hate taking money out of my savings. I have several savings accounts earmarked for certain things and I’ve assigned a mental tolerance for when and why I will take money out of any account. I would love to have a 3 month emergency fund saved up, but our income/health issues hasn’t allowed it, yet we are trying very hard to be on a cash basis and I can’t imagine getting laid off of work and immediately tapping the emergency fund whether it be $100 or $100,000! Take to do what you can to save and make ends meet, before touching that. When I went onto disability we tried to stretch our money as far as possible and good thing–eight years later I’m still not back to work! Some people have never yet been hit with the reality of life. Some of us have been hit too many times!

  13. Debtbuster says:

    I think I have the same viewpoint as the rest of us here. Going straight into the emergency fund is a very risky strategy and probably not a very good one. I once had a similiar experience where I lost my job and just like KellyB I just *knew* I was going to get a new job before the month was over. The month went by, so did the next, and the one after but still nothing. But unlike KellyB I had taken the road of your friend and my e-fund was gone not long after the first month had past. But due to my optimism I started putting things on credit (highly not recommended) because I *knew* I would have a job and the income to pay it off soon. I didn’t find a job until a good 6 months after and by that time I was also in a good mess with all my debts. Let’s just say I’ve learnt my lesson and have started my emergency fund again which can be easily accessed (in case of a real emergency) and the only time it’s touched is when I deposit money and I intend for it to stay that way! All I can say is all the best of luck to your friend.

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