What to Do When Your Emergency Fund Runs Out

1. Create an Emergency Budget

First, take steps to ensure that you can continue covering your most essential expenses, such as housing, utilities and groceries. This will mean, at least temporarily, only paying for the essentials and cutting back drastically on the nonessentials.

To create an emergency budget, track your expenses and limit your spending by category, potentially using a budgeting app to stay on course. You'll prioritize the following expenses, leaving out spending on entertainment, travel, meals out and other "wants" for now:

• Rent or a mortgage payment
• Gas, water, electricity, internet, cellphone and other utility bills
• Health insurance and medical expenses like prescriptions and copays
• Other types of insurance, such as auto and homeowners insurance
• Transportation such as gas or a public transit card
• Minimum payments toward your auto loan, student loan, credit card or other debts
• Child care

Tally up these expenses and make sure your current income can cover them. (If it doesn't, read on for what to do next.) Any extra money after payday is best allocated to replenishing your emergency fund before it goes toward discretionary spending.

Learn more: How to Create a Bare-Bones Budget

2. Explore Temporary Assistance Programs

Government assistance programs are available for precisely the times when you've exhausted all other resources. Low-income families who can't afford their basic expenses can qualify for short-term cash assistance through Temporary Assistance for Needy Families (TANF) or help with heating and cooling bills through the Low-Income Home Energy Assistance Program (LIHEAP).

Search for government benefits you're eligible for using the federal government's benefit finder tool. If you have children, you can also search for state financial assistance resources specific to families with kids at ChildCare.gov.

3. Talk to Your Creditors

If you've been using your emergency fund to pay bills, then you likely need more breathing room in your budget to cover your basic needs. You can lower your bills by negotiating with utility providers and shopping around for better deals, such as for lower auto insurance premiums.

You can also ask your creditors about their hardship programs, which could help you lower or pause your debt payments. Hardship programs exist for many different types of debt, including auto loans, credit cards and mortgages in the form of forbearance or loan modification. Reach out to every creditor you have and let them know your circumstances, which will usually mean writing a hardship letter and asking for the financial assistance you need. Use any money you save to cover your basic expenses first, and add to your emergency fund next.

Learn more: What to Do if You Can't Pay Your Essential Bills

4. Find Ways to Earn Extra Income

Another way to add flexibility to your budget is to earn more money. You can ask for a raise at work or take advantage of additional employee benefits—including benefits specifically for those struggling financially, such as salary advances and employee hardship grants.

You can add to your income by taking on extra work from home or using popular side hustle platforms like TaskRabbit or Uber. There are lots of ways to make $100 fast, by taking surveys online, delivering food or groceries, renting out an extra room or parking space or transcribing audio. To earn more in the long run, add freelancing or an additional part-time job to your schedule so that you can count on that extra income as you rebuild your savings.

5. Open a High-Yield Savings Account

It will take time to strengthen your finances enough to cover your bills and have some extra left for savings. But once you're able to, start replenishing your emergency fund. The best place to put your cash is in a high-yield savings account, which pays you more interest than a traditional savings account would and often charges minimal or zero fees. For the highest interest rates, explore accounts at online banks.

Your best bet is to find a high-yield savings account that has no minimum opening deposit or monthly balance requirement so that you can set up the account without having a lot saved. With a savings account in place, you'll be able to immediately set aside extra money that comes through, such as a tax refund, and get in the habit of saving—even just $5 a month.

Learn more: Best High-Yield Savings Accounts

6. Set Up Automatic Transfers

Reestablishing an emergency fund is a long game, as experts' recommendation to save three to six months' worth of basic expenses will take a while to achieve. But even saving a few hundred dollars will help you avoid using a credit card to cover a sudden financial shock.

To get there, set up automatic transfers from your checking account to your new high-yield savings account. Start small and increase the transferred amount when you're able to. Contribute a portion of any financial windfalls you receive to your emergency fund. And most importantly, keep your savings intact by opting to cut expenses or add to your income, if you can, before dipping into the fund.

Learn more: How to Create an Automated Savings Plan

Frequently Asked Questions

The Bottom Line

When you've depleted an emergency fund, you've proven it was possible to save for emergencies in the first place. To build an emergency fund again, limit your spending to the necessities for a time, get financial help if you need it and look for ways to add to your income. Give yourself the gift of financial security by making a replenished emergency fund a top priority, and by taking the opportunity now to find a budget plan that works.