Reasons to Use Your Emergency Fund

**This post may contain affiliate links. I may be compensated if you use them.

Quite often I’m asked how we should prioritize our money, and one of my first responses is to set up an emergency fund. Setting aside 3-6 months worth of expenses should be made a priority because we’ll never really know what will happen in our lives. Putting that much money can be a real struggle for some, but once we have the money saved, it can give us peace of mind.

Recently a pretty big unexpected expense came up in my life, but it never worried me since I had funds set aside already. Since money wasn’t an issue, I was able to focus on the other aspects of my predicament. Having an emergency fund made my decision making a lot easier, but I wondered how others would handle it if they didn’t have any money available?

Every situation is different, but I would imagine when money is a real concern, emotional decisions get made. Some of us might not have a choice and decide to charge the costs to credit, while others may be forced to make a tough decision since they can’t afford it. Neither of these choices is ideal, so it’s not hard to see how important it is to have an emergency fund in place.

Save for your emergency fund

Reasons to use your emergency fund

Job loss – Losing our jobs will always be one of our biggest fears since without a job, we won’t get paid. What makes losing our job even more frustrating is that it can happen at any time, and for any random reason. Having that emergency fund will give us a bit of a cushion while we hunt for a new job.

Medical expenses – Canadians are pretty fortunate to have some of the best healthcare in the world. Not only are trips to the doctor and hospital free, but so are many major medical procedures. However, there are times where we need to pay things out of our own pocket. Some medical expenses could cost thousands of dollars, so it’s best to be prepared just in case.

Travel – Let’s be clear, we should never blow our emergency fund on a vacation, but there are times when we’ll need to use it for travel. A sudden death in the family could force us to take an unexpected trip, and last minute flights tend to cost a small fortune. In these situations we already have so many things on our mind, it’s nice that money isn’t one of them.

Maintenance – It’s always a good idea to budget separately for house and car maintenance, but sometimes a major repair is required, and our reserve funds might not be enough. Dipping into our emergency fund to cover any outstanding costs makes a whole lot more sense than charging it to credit. The tricky thing is knowing what counts as an emergency. A burst pipe counts, but draining our reserve funds for a kitchen renovation is not a smart use of our money.

Final word

Emergency funds take time to build so don’t stress out if yours isn’t fully funded yet. The easiest way to build it up fast is to simply budget for it. Put aside $50-100 a month and you should get there in no time. Saving isn’t very sexy, but at least you won’t stress out when it you need to draw on those funds in emergency situations.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi


  1. Esther @ MoneyNuggets on November 30, 2015 at 2:07 AM

    Great tips. It can be really difficult to know when to actually spend your hard saved emergency fund. These these are really helpful. Another useful one is when you have to undergo a major repair. I recently had to use my emergency fund to fund a major car repair.

    • Barry Choi on December 2, 2015 at 12:31 AM


      Yes waaay too many people use their emergency fund for the wrong reasons so it’s good to have a rough guideline.

  2. Graham Bodel on December 16, 2015 at 12:42 AM

    Great points to highlight – few people have an emergency fund and it’s very important whether you have a lot of money or just a little saved. Thanks.

    • Barry Choi on December 16, 2015 at 9:16 AM


      Yes way too many people focus on other things and forget about the importance of an emergency fund.

  3. Jing on July 25, 2017 at 12:34 AM

    I’ve had to cash out my emergency fund for the job loss reason quite a few times myself. It was SO helpful to have an emergency fund in the first place! A job loss is definitely an emergency 🙂

  4. Contantine on July 9, 2019 at 3:27 PM

    We see a lot of clients go through similar situations. Some great advise here! Could possibly even forward this to some clients. Thank you.

Leave a Comment

Get a FREE copy of Travel Hacking for Lazy People

Subscribe now to get your FREE eBook and learn how to travel in luxury for less