Bill Kearney has been featured in...


7 Scenarios to Break Open the Emergency Fund

Search Articles


Request Your Consultation
Schedule Now

Emergencies happen. Things happen. Life happens. Are you prepared?

When an emergency happens, there are no forewarnings or “red flags” to prepare you along the way. Most of the time, they occur unexpectedly and at the worst times. The real question that most people ask themselves when going through the emergency, is when should they actually use their emergency fund?

Take a look below for the top 7 reasons you should actually break open your emergency fund. (Please note that there is no particular order of importance.)

Clunk, Clunk: The average American household owns 1.4 cars, per an article published in 2016 on The point here, if you’ve ever owned a car before it’s like that at some point something has unexpectedly gone wrong. Sometimes those untimely vehicle costs can add up to be quite pricey. If it’s well over your expendable income after expenses and savings, you have the green-light to go ahead and dip into the emergency fund.

Trip to the ER: Between kids, sports, accidents I’m sure you’ve had to make a trip or two to the emergency room. The ER bill is usually jaw-dropping and is something that you can never actually be prepared for. In these cases, you can use that emergency fund to cover the emergency room costs.

Technology: Technology has completely taken over. Nowadays, it’s not uncommon for people to have a cell phone, business cell phone, laptop and an iPad. These are all things that require you to spend money and they aren’t cheap either. If your phone breaks or the laptop starts to underperform because it’s old, you’ll have to use those emergency funds to replace.

Expecting: When expecting a baby, the medical costs can be staggering. From delivery, care for the mother, care for the newborn, the average costs nowadays for an American to deliver a baby ranges from $10,000 to $30,000. And that can even be with insurance.  In addition, to care for a newborn once you’ve left the hospital doesn’t get any less expensive. This is one scenario in which you might have to break out that emergency fund.

Being a Caretaker: When a family member or close friend needs assistance because of an illness or disability, not only can it be heartbreaking, it can also be bank-breaking. If becoming a caretaker requires you to take a leave of absence, change jobs to be more available, or even move to be closer, it can easily chance your financial journey. Don’t hesitate to access the emergency fund if you really need to.

Lost Your Job: The unemployment rate has increasingly decreased over recent years. That doesn’t mean, however, that people can’t or won’t lose their jobs. It’s something nobody expects to happen but can. Without any income to support your standard of living, having an emergency fund of at least six months’ worth of your average expenses is a must.

Lost Your Pension: Unfortunately, it’s happened before and it will likely happen again. Companies go under, can’t afford to pay a retiree’s pension so they have to make the decision to cut them. With a portion of income now gone, this would be a good reason to use some of your emergency funds. Just be sure to avoid excess withdrawal risk.

Being prepared is key. Having an emergency fund for emergency situations that I’ve laid out above could give you the peace of mind you need to help you get through those major life events. Life is fun, life is great, but don’t ever think that it won’t throw a few curveballs along the way.

An emergency fund is your way of planning for the future. Without a plan, you’re just “winging it”.

If there’s a different life event or scenario that I didn’t list above and you are wondering if you should use your emergency funds to help you through, just give me a call. We’ll take a look at all the pros and cons and make the best decision based upon your personal situation.

Stay well and prepare today!

  |     |     |     |