How to Build an Emergency Fund in the Middle of an Emergency

“Take a really aggressive approach,” Ms. Beasley said, and direct all the savings to your emergency fund.

Depending on your circumstances, you may consider temporarily reducing contributions to your retirement account and redirecting the money to an emergency fund. It’s common for people to contribute to workplace accounts like 401(k) plans yet lack emergency savings, Ms. Beasley said. That’s because many employers automatically enroll workers in retirement contributions from their paycheck.

In general, it’s wise to keep contributing to retirement plans regularly, because your money is buying more shares when prices are low. But if your situation is dire, a cut is better than stopping entirely. Ms. Beasley said one option might be to suspend contributions above any match from your employer; that way, you’re still saving for your long-term retirement. Just make sure — set a calendar reminder on your phone, perhaps — to resume contributions once the crisis passes.

While it might not be something you have considered in the past, she said, now is a good time to identify local food banks, or investigate how to apply for government food benefits, like the Supplemental Nutrition Assistance Program (SNAP) and the Supplemental Nutrition Program for Women, Infants and Children (WIC).

If you own a home, you could consider opening a home equity line of credit as a financial backstop. The loans let you draw on your home equity — the difference between the value of your home and any mortgage you already have. At the end of 2019, nearly 45 million homeowners with mortgages had “tappable” home equity, $119,000 on average, according to the research firm Black Knight.

Lines of credit generally carry lower interest rates than credit cards. However, the loans are secured by your home, which means you risk foreclosure if you miss payments. For that reason, Ms. Beasley said, people should be cautious about using home equity.

Once you have a savings cushion, don’t feel bad about using the money if you need it — that’s what it’s for. An emergency fund is different from retirement savings, which are meant to grow over a long period. Rainy-day accounts are meant to be drawn down and replenished so you can use them again.

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