TomorrowMakers

Knowing how to save money is essential for emergency fund planning.

emergency corpus

Using your emergency fund can be a crucial decision you make during your lifetime. It takes a long time to save and build money for contingencies and create an emergency corpus. You must know when and where to spend this hard-earned emergency corpus. 

We list the top 10 situations when you can use your emergency corpus. 

Also ReadConsider these options to get an emergency fund quickly. 

Reduced Income or Job Loss

If you are in a financial crisis due to a job loss or experience a dip in income, you might have to rely on your emergency corpus to meet your expenses. You might have to use this money until you find a new job or increase your income. You must have at least 6-12 months' funds to cover your basic expenses. 

Medical Needs

Medical needs and emergencies require money, and you might end up in situations where your medical insurance does not cover certain situations. You can rely on your emergency fund when you or your loved ones need money. 

Repairing Or Purchasing A New Car

You can use your emergency fund to repair your broken-down vehicle or buy a new car. You can always use your car insurance. However, using the emergency fund is a good idea for cases where your car insurance is not enough to cover the expenses. Refilling your emergency corpus once you take out the required money would be best. 

Home Maintenance

Your home might require frequent maintenance work, such as a burst pipe, a leaking roof, or a broken furnace. You can turn to your emergency fund for help. Your emergency corpus can help you cover the expenses. It is common for people to obtain short-term loans to cover these expenses. However, using it would be a good idea if you have enough money in your emergency fund. 

Immediate Travel

You might face a situation where you need to plan an unexpected trip. It might be work-related or personal. It might also be for an emergency. In such cases, you can use your emergency fund to cover your trip-related expenses. 

Legal Expenses

You can use your emergency fund to cover any legal expenses. It is possible that you face a legal dispute or maybe have any legal expenses. Your emergency corpus can help you in such cases. 

Out-Of-The-Blue Expenses

Getting unexpected bills can burn a hole in your pocket. You can use your emergency fund to cover any unexpected bills and expenses. The nature of such bills is such that you cannot plan them. Hence, your emergency fund will help you in such times. You will thank yourself for having enough money collected in your emergency fund. 

Home Insurance

You might have to pay a deductible if you file a home insurance policy claim. You can turn to your emergency fund for this. 

Rental Income Loss

In cases where your tenant is not paying on time, you can use your emergency fund to cover your basic expenses. Landlords must always be ready for such situations and have enough money in their emergency corpus. 

Miscellaneous & Other Expenses

We never know where life will go and what it will throw at us. For such unexpected situations, it is essential to have an emergency corpus to cover any expenses. These can range from taxes owed to a loved one's wedding. 

Also ReadWhy should you create an emergency fund before investing?

A financial crisis means a tight budget. Using your funds wisely is essential during such testing times. Build an emergency fund through liquid instruments like high-interest savings accounts, liquid mutual funds, and fixed and recurring deposits. You can lock your money and grow it through interest income. While it is easy to spend the emergency fund, it is challenging to build it. Spend this money wisely and avoid financial issues when you face an emergency. You must only use your emergency fund when you have no other income sources. 

Using your emergency fund can be a crucial decision you make during your lifetime. It takes a long time to save and build money for contingencies and create an emergency corpus. You must know when and where to spend this hard-earned emergency corpus. 

We list the top 10 situations when you can use your emergency corpus. 

Also ReadConsider these options to get an emergency fund quickly. 

Reduced Income or Job Loss

If you are in a financial crisis due to a job loss or experience a dip in income, you might have to rely on your emergency corpus to meet your expenses. You might have to use this money until you find a new job or increase your income. You must have at least 6-12 months' funds to cover your basic expenses. 

Medical Needs

Medical needs and emergencies require money, and you might end up in situations where your medical insurance does not cover certain situations. You can rely on your emergency fund when you or your loved ones need money. 

Repairing Or Purchasing A New Car

You can use your emergency fund to repair your broken-down vehicle or buy a new car. You can always use your car insurance. However, using the emergency fund is a good idea for cases where your car insurance is not enough to cover the expenses. Refilling your emergency corpus once you take out the required money would be best. 

Home Maintenance

Your home might require frequent maintenance work, such as a burst pipe, a leaking roof, or a broken furnace. You can turn to your emergency fund for help. Your emergency corpus can help you cover the expenses. It is common for people to obtain short-term loans to cover these expenses. However, using it would be a good idea if you have enough money in your emergency fund. 

Immediate Travel

You might face a situation where you need to plan an unexpected trip. It might be work-related or personal. It might also be for an emergency. In such cases, you can use your emergency fund to cover your trip-related expenses. 

Legal Expenses

You can use your emergency fund to cover any legal expenses. It is possible that you face a legal dispute or maybe have any legal expenses. Your emergency corpus can help you in such cases. 

Out-Of-The-Blue Expenses

Getting unexpected bills can burn a hole in your pocket. You can use your emergency fund to cover any unexpected bills and expenses. The nature of such bills is such that you cannot plan them. Hence, your emergency fund will help you in such times. You will thank yourself for having enough money collected in your emergency fund. 

Home Insurance

You might have to pay a deductible if you file a home insurance policy claim. You can turn to your emergency fund for this. 

Rental Income Loss

In cases where your tenant is not paying on time, you can use your emergency fund to cover your basic expenses. Landlords must always be ready for such situations and have enough money in their emergency corpus. 

Miscellaneous & Other Expenses

We never know where life will go and what it will throw at us. For such unexpected situations, it is essential to have an emergency corpus to cover any expenses. These can range from taxes owed to a loved one's wedding. 

Also ReadWhy should you create an emergency fund before investing?

A financial crisis means a tight budget. Using your funds wisely is essential during such testing times. Build an emergency fund through liquid instruments like high-interest savings accounts, liquid mutual funds, and fixed and recurring deposits. You can lock your money and grow it through interest income. While it is easy to spend the emergency fund, it is challenging to build it. Spend this money wisely and avoid financial issues when you face an emergency. You must only use your emergency fund when you have no other income sources.