Emergency Funds in COVID19

How do you manage your emergency funds during COVID-19?

WHO declared the outbreak of COVID-19 as an International Public emergency. With this situation, the UAE Government has taken various steps to prevent the spread of disease which includes compulsory work from home instructions. To ease the financial burden, the government has implemented the provision of paid leave provision, unpaid leave, temporary salary reduction, and various other measures. During this financial burden if you have an emergency fund it will come to your rescue.

An emergency fund is used in case of desperate needs or any situations like job loss, health issues and also during unexpected events like the COVID-19 crisis. 

Having an emergency fund and effectively using it, will give you the best results. Here we provide you with some suggestions on how to use your emergency fund effectively.

  1. Spend money on only your essential household necessities required for your survival. These expenses include payments for your house rent, groceries, utility payments (gas bill payment, electricity bill, water bill payments and others)
  2. Spend money on medical precautionary measures which enhance your personal hygiene such as sanitizers, masks, hand wash lotions, soaps and other personal hygiene items. Remember prevention is better than cure.
  3. Spend money on your medical expenses. If you have a history of medical illness spend on your well being.
  4. Choose monthly subscriptions instead of yearly subscriptions. You can save money on other priorities.
  5. Don’t make any new investments unless you have surplus funds in your bank account.
  6. It would be better to postpone if you have already planned any major purchases unless you have sufficient funds in your bank to survive for next 6-12 months time.
  7. Make your plan to spend emergency funds only after considering expenditures like hospitalization or sudden Job loss. Being extra cautious would always help in such unprecedented times.

Check Here: Importance of Emergency Fund

During this period of the covid-19 crisis, suppose if you have lost your job or your business is running low, emergency funds can manage your bill payments and cost of living expenses.

During this COVID-19 crisis use Emergency funds effectively. Prepare a budget for the next 6 to 8 months and allocate your payments. Write down all your EMI payments and credit card payments. If your bank provides you with EMI deferment and they do not charge additional interest or fees, postpone your EMIs. If your bank levies any charges on deferment of EMI then don’t choose the option because you will pay more than usual. 

Do not spend your Emergency funds on one time expenses and postponed expenses. 

  1. Do not spend on one time expenses such as advanced income tax, property tax,  car registration, any one-time renewals/yearly subscription payments, holiday Gifts and others.
  2. For expenses paid once in a year do not use emergency funds. You know that the purpose is not towards yearly bill payments. For bill payments, you should set up a separate budget.
  3. Do not spend money on luxurious items or status symbol goods.
  4. Do not spend on postponed expenses. Spending your emergency fund money towards such expenses will not serve the right purpose.

What are Expenses that you can postpone ? 

Suppose you have a car and you know you have major car repair at the same point but you are managing to use it. Your car may not break down even if repairs are not done immediately. So, you can postpone this expense to another 3 to 6 months. You have to make your arrangements for major car repair expenses without using money from the emergency fund.

Do not depend on the emergency fund for one time expenses.

One time expenses could be any domestic household expenses such as replacing an air conditioner, repair roof leak, washing machine, water heater, and others. Avoid using emergency funds for these expenses if possible. 

Spend money according to your budget and do not spend money from emergency funds on long term investments or stocks in the downtrend.


Coronavirus pandemic has created a National crisis and during this situation, an emergency fund improves Financial Security. It creates a safety net of cash that can be used for emergency expenses. The purpose of an emergency fund can be fulfilled only when it is used effectively. Having an emergency fund will not solve the purpose but how effectively you manage your expenses during the crisis time will give you the best results.

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.



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