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When Should You Break Your Emergency Fund? | GEM Debt Law

An emergency fund is a great resource of funds to have set aside for rainy days. The funds are usually kept in a savings account or high-interest savings account. We are going to share when you really need to access your emergency fund and how to replenish it.

When should you use your emergency fund?

Trying not to burn through your emergency fund unless a real emergency is happening is worth more than going into debt and relying on credit cards. A list of reasons of when is a good time to use your emergency fund below:

  • Job loss
  • Spouse or partner losing their job
  • Illness
  • Life disasters such as house burning down

Not having an emergency fund for situations like that can cause you to fall too far into debt. Luckily, if that happens, our debt specialists can negotiate with your creditors and reduce your debt up to 75%. There are also options such as consumer proposal or bankruptcy when the options are limited. A debt specialist will avoid bankruptcy to help maintain your credit and your ability to qualify for loans.  But a good emergency fund can help you avoid these situations.

When should you NOT use your emergency fund?

The money in your emergency fund can be very tempting to withdraw for a couple of reasons, especially when you are caught short. If you do not have a budget set in place, you might end up leaning on your savings account and exhausting the funds. A few temptations to avoid or not to spend your rainy-day fund on are the following:

  • Spontaneous purchases such as new clothes, shoes, etc.
  • Holiday gift buying
  • Deciding to replace all your appliances using the emergency fund
  • Everyday expenses such as groceries that go past your budgeting power
  • Making lots of purchases in the App Store!

How to build your emergency savings back up

Using up your savings account can feel discouraging, but Hey! It was not easy getting that money in there and you made sure to spend it at the right time. The best way to saving money again is to take it step by step. We will share a few tips on how to do so.

Put a pause on other money goals. Your focus now is to build the emergency fund back up. The vacation or new car you’ve been looking at can be put aside for now. 

Track spending. If you haven’t made a monthly budget that you already follow, this is the time to start. There are many websites and apps you can use to track your bad spending habits and figure out where you can cut back on your spending. One good application that is very efficient because it is linked to your cards is called Mint. The Mint app can be found on both Apple and Android versions. You will be surprised how much help and insight this app will give you. 

Set aside from each paycheque. One of the ways you can build your savings more quickly is to start automatic withdrawals from your paycheque every month. The transaction is seamless, and you won’t be tempted to use the money.

What to do when you are in too much debt after exhausting your emergency fund?

If you have accumulated too much debt after exhausting your emergency fund or if you never had an emergency fund, you could get help from a debt specialist. A debt specialist can help you qualify for debt reduction and help you eliminate debt

Good financial health comes with an emergency fund. A sum of money should be reserved for rainy days to get you through the storm!

Wishing everyone a wonderful holiday!

GEM Debt Law


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