Should I drain my emergency savings because of coronavirus?

First off, congratulations for having an emergency fund! Approximately 25% of Americans couldn’t cover an unexpected $400 bill, let alone a month of expenses. To answer the question of whether or not you should drain your emergency fund because of coronavirus, that all depends on your situation.

Do you need to drain your emergency fund? If you’ve lost your job or had a cut in your hours or salary, then using the money in your emergency fund is warranted. Whether you need to drain your account is another question.

When you have a loss of income, the first thing to do is to revise your budget, cutting out all of the extras. This includes eating out, getting coffee out, and entertainment. All the little extras. Your budget should consist only of necessities such as housing, utilities, car payment, insurance, gas, medicine, and food. Cover your basic survival needs so you have the ability to look for employment.

Next, evaluate all of your income. Think of new ways to come up with extra cash. This could include selling unwanted or unneeded items, babysitting for friends, and donating plasma. Once you’ve done this, determine how much you need to take out of savings to cover only the necessities.

The goal is to be as frugal as possible so that you only need to use some of your savings. This will help to stretch that fund out as long as possible. It’ll also give you time to survive until hopefully the tide turns, and you can get back to full employment.


Recommended Articles

What to Do if You Are Facing Eviction During COVID-19

Housing is a basic need for everyone, providing shelter, safety, and security. Whether you are paying a mortgage or rent, housing expenses can be a major percentage of your household budget. When your income is reduced and you are faced with making decisions about how to meet your financial obligations, housing is a top priority.… Read more

Am I Eligible for the Second Stimulus Check?

Just before 2020 ended and 2021 began, President Trump signed a second pandemic relief bill. This bill included a second round of stimulus checks, or Economic Impact Payments, that will be sent to Americans under certain income thresholds in the coming weeks. Some of these checks have already started filtering in via direct deposit. As… Read more

What Is a Recession and How Do I Prepare for One?

The National Bureau of Economic Research (NBER) is the organization that decides if the US is in a recession. They define a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” So, what the heck does this mean? In a recession, companies are… Read more