Emergency Budget: How To Budget Your Money During An Emergency

*This post may contain affiliate links, please see my disclosure

If you experience job loss or any other MAJOR financial emergency in your life, read this guide to find out EXACTLY how to handle your money.

And make sure to grab your FREE budget template to make your own EMERGENCY BUDGET TODAY!

Do You Have An Emergency Fund?

Most traditional financial advice tells you to save 3-6 months of expenses in an emergency fund to protect against things like job loss and major emergencies. I tend to agree, and might even recommend MORE (up to 12 months) if you expect a MAJOR life event coming up (job loss, moving, quitting).

But the problem is nobody ever talks about how you should USE that emergency fund if the time comes.

We all know that life would look different if our income went away, but not many people have a plan in place for when that happens.

And if you happen to get quarantined for 14 days, or worse yet, if your job closes for a month, how should you handle your finances?

That’s why I created the “Emergency Budget“, to give you a clear-cut plan for managing your finances when a financial emergency happens.

What Is An Emergency Budget?

An emergency budget is a budget that you set up when you need to cut out ALL unnecessary expenses in order to survive. It is something that you should have in place as soon as possible, as emergencies don’t wait until you are prepared to occur.

Emergencies that could cause you to switch over to your emergency budget are job loss, major home damage, unexpected medical expenses, the IRS knocks on your door, an outbreak of a highly contagious flu-like virus that is causing the entire world to panic and forcing you into a mandatory quarantine, or any number of high dollar emergencies.

If you find yourself in one of these unfortunate circumstances, you need to be prepared.

How To Create An Emergency Budget

First thing’s first…you have a budget, right? If not, I got you covered, you can grab my FREE Budget Template real quick. Then read through my Complete Guide To Budgeting for help putting together a budget that WORKS!

Now, make a second copy of that budget template, and we’ll get to work on stripping away all the unnecessary items. We’re going to create a BARE BONES budget for you to live on so your emergency fund lasts a LOT longer.

I suggest sitting down with your significant other to come up with what stays in your budget, and what gets tossed to the curb. Here are some general rules to follow when creating your emergency budget:

Hit “Pause” On Your Goals

If you are currently paying off debt, or saving toward other big purchases, you need to hit the “pause” button on those goals.  For debt, simply pay the minimum payments. You need to focus on preserving your cash, and you will immediately get back to these one you have replaced your income.

In uncertain times, it’s better to have cash on hand and delay your goals slightly for peace of mind.

Convert Savings Buckets To Emergency Funds

If you have savings categories for things like vacation, Christmas, gifts, car maintenance and home repair, I suggest removing those as well. You can live without them while you are in emergency mode.

I even suggest removing car and home maintenance savings because you need the money to survive, and most homes/cars can go at least 6 months without need for maintenance.

All the money saved for those things is now part of your Emergency Fund to help get you through the next few months.

Cancel (or Pause) Your Subscriptions

Cancel any monthly subscriptions that you can live without (yes, including Netflix). You’ve been meaning to do this anyway, so now is the perfect time to go through ALL of those services that you don’t really need, and drop ’em! Any “in a box services” (bark box, stitch fix?), and any extra streaming services (I recommend having AT MOST 2 streaming services. We only have Amazon Prime, and we’re fine)

Don’t know how find and remove all those subscriptions? Have Trim do the work for you. They can find ALL recurring subscriptions and give you a list (for free!). Then just give them a call and pause or cancel the ones you don’t NEED.

Lower Your “Fixed” Expenses

There are certain things you NEED. Namely, food, shelter (and utilities), and transportation. You can’t avoid paying for these, but you can work on lowering these expenses.

For utilities, things like turning off the lights, unplugging unused appliances and devices, run your appliances at night, stop watering the lawn, using less water when showering or washing, wearing more clothing and lowering your thermostat can help lower your bills.

For your bills, now would be the time to shop around for better rates on car insurance, cell phones and internet. You can also have a service like Trim negotiate your bills down for you (as a small cost).

Just make yourself more conscious of how you are using things like water, electricity, heating/cooling, and devices. This is not only a way to save some money, but is an AWESOME way to help lower your consumption and learn how to live on less (trust us, we know about this living in 300 sq. ft.!)

Reduce Or Remove Spending Cash

Depending on how bad the emergency is, I suggest greatly reducing , or even removing the spending cash category. You can’t spend money that you don’t have, and you also don’t want to go broke quicker because you can’t resist the Dorito Taco at Taco Bell.

Again, these funds should be added to your emergency fund, and put toward your NEEDS.

Reduce Your Food Budget

I know, I know, this is not easy at all. But if you lost your job or income for a while, you WILL find a way to remove $50 or $100 (or more) from your food budget, even if you don’t eat quite as healthy while you are dealing with this emergency. No sense in actually going hungry because you “needed” your organic pine nuts.

The CDC recommends storing up 2-week worth of supplies in case of a quarantine, so you might need to make a one-time purchase of things like rice, beans, and other non-perishable items. But other than that, start planning simpler meals and snacks for a while.

Cut Out All Unnecessary Spending

This is a catch-all for all the “Misc” spending you may be doing that you don’t need to right now. Things like Online Shopping, Clothing, Entertainment and Going Out (because, let’s be real, it’s #NetflixAndChill for the next month) can go away for a while.

The goal here isn’t to STOP HAVING FUN, but to simply stop spending money to have fun, make sense?

Bust out the board games, old movies,

Sample Emergency Budget

Ok, now it’s time to see what this could actually look like if you lose your income for a while.

Let’s say you lose your income. Now $4,000/month is gone, and you need to adjust, QUICK!

Here’s a sample budget that shows how much you can reduce your spending to help preserve your Emergency Fund and weather the storm.

Mortgage $1,500 $1,500
Electric $75 $60
Water/Sewer $60 $50
Natural Gas $75 $65
Garbage $30 $30
Cell $100 $80
Internet $45 $45
Car Insurance $100 $80
Student Loan $350 $200
Food $800 $600
Gas $180 $125
Date $100 $0
Spending Cash $150 $0
Pet Food $50 $0
Savings Buckets    
Car Maintenance $50 $0
V-day/Anniv. $50 $0
Christmas $100 $0
Birthdays $50 $0
Vacations $100 $0
Beauty $35 $0
Total Spending $4,000 $2,835

As you can see, losing your income can GREATLY impact your monthly budget, and for most people, would send them into a panic. BUT, you have now created an emergency budget and are spending $1,165 less per month!

To put that in perspective, you would drain a $24,000 emergency fun in just 6 months, but with your emergency budget in place, a $24,000 emergency fund will now last almost 9 months!

Now hopefully you would not be without income for 9 months, but it is GREAT to know that you can last 3 months longer without going into debt.

So, if you haven’t already, sit down, talk it out, and put an emergency budget in place. Now, when an emergency arises you can still sleep at night, knowing you have a contingency plan to weather the storm.

What NOT To Do With Your Money During A Pandemic

Now that you know how to plan for this health crisis, here’s what you SHOULD NOT do.

  • Do NOT sell off your investments in a panic. You will only lock in your losses. Stay the course, play the long game, and keep investing all the way down, and all the way back up (yes, it will go back up). As a former tax professional in 2010-2011, there were SO MANY heartbreaking stories of people who lost half their money by selling off at the bottom. Please do not do this.
  • Do NOT spend TOO MUCH on hoarding supplies. Yes, you need to be prepared. No, you don’t need 1,000 rolls of toilet papers and 500lbs. of food. Leave some for the rest of us.
  • Do NOT try to time the stock market if you don’t have extra cash. Yes, people (including me) are saying “stocks are on sale!”. And yes, they are. But if you don’t have a hefty emergency fund in place AND extra cash on top, then you are not prepared to dump extra cash into the market. Just keep your regular investing schedule (every paycheck), and move along.

Use wisdom, discretion, and research on all your money moves, please.

What Budget Apps Allow You To Create An Emergency Budget?

Of course, you can always create your own Emergency Budget using my FREE Budget Template. Whether you print another copy, or use the Google Sheets version, you can make a duplicate budget and put your emergency plan in place.

The only other app I know if (so far) that allows you to create multiple budgets at one time is YNAB.

I personally use YNAB (You Need A Budget), and have put together budgets for multiple scenarios (and years). It’s as easy as going to the settings and selecting “New Budget”.

Then simply label it “Emergency Budget”, and input your BARE BONES expenses. And if you find yourself in NEED of that budget, in the settings just go to “Open Budget” and you’re set!

Try YNAB free for 34 days

Or read my full YNAB review HERE, and how to put together a YNAB budget HERE

What If I Don’t Have An Emergency Fund?

Look, I get it. 40% of Americans don’t have $400 saved for an emergency, let alone a full Emergency Fund. At this point, you need to start reaching out to to find external resources to help you weather this storm.

Yes, the “government” is working on helping those who are losing income during this, but if you need immediate assistance, places like a local food bank can help with supplies. Don’t be too proud to get the help you need, during this health crisis (and heck, all the time!), everyone needs to eat and a place to sleep.

As for what bills to pay and what NOT to pay, you need food, shelter and utilities. And if you have debt, you can’t just stop paying that either.

I wont’ write the entire thing out here, as Dave Ramsey has a great article on how to handle debt payments if you can’t afford the entire thing, but just make sure you take care of your family, before anything else.

Don’t Wait Until You Have An Emergency (or Get Quarantined!)

Whatever tool you use, put this plan in place so you know EXACTLY what to do if you find yourself in an emergency. This will help you sleep at night, knowing you have put together a plan that WORKS.

And make sure you start building that Emergency Fund like YESTERDAY. It’s the first step toward Financial Freedom, and the one that can REALLY take your money stress away.

Right now, CIT Bank has the BEST interest rate in their Money Market account, and it only takes a few minutes to open an account.

Open a CIT Money Market Account

Be Prepared, But Don’t Panic! 

Yes, things will be VERY tight. But humans have the amazing ability to adapt when the going gets tough, so just know that you WILL make it through, and this budget is NOT forever. Take comfort in know that you at least have a plan in place.

Obviously your family and their health and safety are at the forefront as this medical crisis looms. Take precautions, stay educated, be prepared, but don’t panic.

Comments: Let me know, what else are you doing to prepare for this health crisis? Any ideas on how to best to navigate this uncertain time? Drop me a note below!

Jacob Wade

Jacob Wade

Jacob Wade has been a nationally-recognized personal finance expert for the past decade. He has written professionally for The Balance, The Spruce, LendingTree, Investing Answers, and other widely-followed sites. 
He’s also been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance.

In 2018, Jacob quit his job and his family decided to sell everything (including their home) to take off on an adventure. They traveled the country in an RV for nearly 3 years, visiting over 38 states, 20+ national parks and eventually settling in the sunshine state!

61 thoughts on “Emergency Budget: How To Budget Your Money During An Emergency”

  1. I don’t have an emergency budget established, but I have thought through what my budget would look like in the event of an emergency. I guess I’d just create the budget when/if the time ever came.

  2. This is a great idea! We basically live off of one of our incomes so I suppose that we have an emergency budget too. If one of us lost our job, we would do just fine…we just wouldn’t be able to save as much. Hopefully that never happens~!

  3. It’s always a great idea to have a backup budget. I agree that you should always know how much you can afford on one income. Great post!

  4. No, but this is definitely something that we should do. Our problem right now is just having a plain old budget since it seems like we have yet to have a “normal” month-heck, week!

    However, we do know the resources available in our community, in the event that we ever really need help making ends meet, and we have enough dry food (beans! rice! oatmeal!) to live on for about a month if we really needed to.

    • The thing about budgeting is that you will most likely NEVER have a normal month. You need to review your upcoming month before it begins, and talk about the unique expenses for that month (activities, birthdays, etc…). Our budgets changes every month, because there are so many different things from month to month.

      Sounds like you have the Dave Ramsey diet available, which is awesome. (RICE AND BEANS!!!)

    • Your flippin sweet budget will be flippin sweet and up in a few weeks 😛

      I like what Kurt said, just put “optional” next to the items that you would remove, and you can remove them if the time ever comes.

  5. We don’t currently have an emergency budget, but it makes a lot of sense to have one and I think I’m going to run some numbers just in case. You can never be too prepared for a financial emergency. I think the first thing to go for us would be the cell phone budget.

    • It’s a good exercise, and really gets you thinking about what’s important in case something happens. You might even cut something out of your budget that you finally realize is a waste of money.

  6. I guess it would be silly if I said we didn’t but we did honestly. Since I had to go back to school we made sure that we had the budget we were currently using an emergency budget just in case something happens. Now that I am done school and making more money we still have that budget. We make sure that we can live on one income and the lower one of the two. It’s a smart thing to do and it’s peace of mind. Great Post.

  7. I think it’s a great idea to divide your spending in your ‘regular’ budget between what I call “Necessary” and “Optional” items. Then your emergency budget is sort of built in. If the emergency hits, you scrutinize those Optional items and dial them back as much as possible, even to zero. So yeah, I’m with you: Whatever technique or lingo you want to use, having an updated emergency budget “on the shelf” is a good idea.

  8. Our family currently has a 9 month emergency fund. With that we also have our emergency budget set. Thankfully with job loss with both my husband and I, we have not touched our emergency fund, but have used our emergency budget.

  9. We’re semi-living on this now…We’ve trimmed in every area possible but still have a slight ”life” allowance (occasional dinner out, gifts) but VERY much trimmed from where we were!

  10. This is a great concept, and it’s one I haven’t considered before. I actually would cut out the internet too. Shocking I know, seeing as my computer is like an extra limb. However, if someone has a smart phone they can use that for awhile and pop into a coffee shop and get a $2 tea and use the internet for a few hours and it would still be less than a month of internet.

  11. We have been doing a version of this “emergency budget” for a good portion of the year, but man, is it exhausting.. This kind of budget intensity really sucks the joy out of life, but it is damn productive!! We have lowered the intensity a bit in recent months, and are still kicking butt, but try to leave a little bit of wiggle room in the process..


    • It really is intense. We tried to switch to super strict emergency budget when my wife left her job to stay at home, but we went a little nuts, so we loosened it up just a little. But you guys are going to be SO happy once you’re done 🙂

  12. This post proves why it is so important to have some savings built up. Even on a emergency budget (and I agree with your choices and $$) unemployment won’t add up to even paying for the mortgage. A couple month emergency savings account is vital.

  13. Emergency budgets aren’t talked about enough. This is a really good article. We’ll be living off our emergency budget until New Years because, we’re hoping to be debt free by then.

    • Debt free for the new year would be awesome. I think everyone could benefit from a little false scarcity to really put things in perspective. I may need to start a challange here soon…

  14. Pingback: Weekly Reads: 02.11.12 | Plunged in DebtPlunged in Debt
  15. I just consider my Fixed Expenses my emergency budget and throw in an extra $100 for food. My most important bill is rent. Then utilities. Then food, etc. There are enough food banks that I think I could get buy long enough in an emergency situation.

  16. Pingback: Carnivals, Mentions, & Weekend Reading #36 — WorkSaveLive
  17. An emergency budget is definitely one that you have to restrict almost all free spending. Even nice-to-have items should come off your budget in an emergency. No cable, no eating out, no “fun”. Hopefully the need to use an emergency budget is short lived but it’s good to have one in your back pocket.

  18. Pingback: Kathleen December 2012 Net Worth | Refinance America
  19. Pingback: How to Rebuild Your Finances After Draining Your Emergency Fund - Binary Reveux
  20. Pingback: How to Rebuild Your Finances After Draining Your Emergency Fund | Trend Inside
  21. Pingback: How to Rebuild Your Finances After Draining Your Emergency Fund - Techbait Tech News
  22. Pingback: How to Build an Emergency Budget (and Why You Need One) | KrazyWorks
  23. Pingback: How to Build an Emergency Budget (and Why You Need One) - Techbait Tech News
  24. Pingback: How to Build an Emergency Budget…and Why You Need One
  25. The linchpin to all budgets is sacrifice. The broad idea of a budget is to categorize your spending, but it will never work unless you make cuts to the spending in some categories. I like your post because it gives several ways that you make those sacrifices as painlessly as possible.


Leave a Comment