Emergency Funds- 3 Questions To Be Asked Before Using Your Emergency Fund

Emergency Funds 

Emergency Funds utilization is very sensitive topic. It is better to ask 3 questions before taking a step of using an Emergency funds. What is an emergency funds? Emergency funds are the funds saved for the emergency needs in case of financial crisis. Why emergency funds are required? Emergency fund is required in case of any unexpected crisis or need. It is an important part of our life. How to utilize the emergency fund? How to utilize it is very important. Ask these questions to yourself before utilizing it. Always ask below 3 questions prior using Emergency fund.

3 Questions Must Be Asked Before Using Your Emergency Fund

These 3 Questions Must Be Asked Before Using Your Emergency Funds

We recommend having at least $1,000 to $2,000 saved corpus aside to manage an emergency expenses without touching rest of your budget. If you aren’t able to put the $1,000 aside now, start saving a small amount that is comfortable for you. These small savings on monthly basis will create a good emergency funds. Preferably emergency fund to be kept in the separate account and to be utilized in case of extreme emergency only. Also define and remember the extreme emergencies for which these funds are saved so that it will be utilized for the same reason only.

Is it the same emergency for which funds saved?

Unfortunately, we may face some difficult challenges that result in major financial crunch. There are few situations when we can use emergency funds. This may be an urgent medical expenses of a family member or may be to settle monthly bills in jobless condition till new employment.

These type of situations are unexpected and difficult to plan for us. One should not utilize emergency fund for paying monthly bills despite of having regular monthly income or purchasing of unwanted luxury items.

Do I Have Another Source to Fulfill The Need?

Losing your primary income source is very difficult financial setback. However, it can be handled easily if one could have multiple sources of income.

Many people don’t have multiple source of income. At the time of crisis, there is no point on thinking about not having multiple source of income or medical insurance. It is better to arrange money by selling unwanted and luxury asset if any rather than utilizing emergency funds. Or get small jobs for quick income.

How Much Time Will It Take to Rebuild Your Emergency Savings?

Your emergency savings once utilized, it may take a long time to rebuild the same. It depends on how quickly you can come up with the crisis situation and improve your sources of income. The time required to rebuild the emergency fund will be treated as risky. Hence, it is advised not to utilize emergency funds fully at a time.

Take Away

Emergency funds are the key to save us in the financial crisis situation. Emergency funds must be utilized for the purpose for which it is saved. It should not be used for the luxury needs, unwanted expenses, you can purchase good Insurance policies to tackle medical emergency. You should have multiple sources of income to avoid financial crisis and to protect the emergency fund. All these factors come under financial planning and financial discipline. We should be prepared to tackle the financial crisis.


  1. Q- What is an important requirement for an emergency fund?  Ans-  To keep you afloat in the event of a income loss or unplanned expenses such as a medical bill or car repair etc.
  2. Q- How much money should I have in an emergency fund? Ans- Three to six months’ of living expenses
  3. Q- How do I prepare for an emergency fund? Ans- Invest in Insurance, Choose right investment option, Start Systemic Investment Plans, Reduce the expenses

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