Should I Tap My Emergency Fund to Cope With an Increase in My Rent?

Housing is often the typical American's largest monthly expense. This holds true whether you're paying a mortgage or writing a landlord a rent check.

The problem with being a tenant, though, is that your landlord generally has the right to raise your rent every time your lease comes up for renewal. And so if your landlord has recently decided to exercise that right, you may be wondering how you're going to come up with the extra money.

A rent increase can clearly constitute a financial blow. And if you have money in an emergency fund, you may be thinking about tapping it to pay your landlord that higher amount. But that's a decision you might sorely regret.

Don't blow your emergency fund on a planned expense

Average rent prices have increased 8.85% per year since 1980, according to iProperty Management. So if you're now looking at a rent increase, it may be a substantial amount.

But as difficult as it may be to manage higher rent payments, one thing you really don't want to do is raid your emergency fund to cover them. The whole purpose of having that money in your savings account is to be able to pay for unplanned bills, like car repairs, or to cope with a period of unemployment. If you keep raiding your emergency fund to cover your rent, which is a planned bill, you may end up with little to no money left when an actual emergency strikes.

Ways to manage a rent increase

If your rent is going up significantly, it may be a sign that it's time to move to a new home. But moving can be a large expense, so that may not be the most feasible option for you.

If you have no choice but to stay in your current rental, you could always try negotiating with your landlord before resigning yourself to a massive rent hike. Your landlord may be willing to work with you if you're a good tenant who never gives them any trouble and always pays on time.

But if that's not an option, you may need to make some lifestyle changes to afford your higher rent. One avenue to pursue is getting a roommate. You'll lose out on privacy, but you might have a much easier time covering not just your rent, but also, your utilities, which you can split with the person you share a home with.

Otherwise, take a look at your budget and see if it's possible to cut your spending. If your rent is going up by $100 a month and you normally spend $100 a month on social outings, you'll need to ask yourself if you're willing to not do that for a period of time so you can cover your housing costs without having to get a roommate. Or, you could pick up a side hustle to come up with your rent money.

A rent increase is hardly fun, but it's something you run the risk of as a tenant. Raiding your emergency fund to cover a rent hike, however, is a dangerous move. And it's one you should really try to avoid at all costs.