Using PTO as an Emergency Fund
Using PTO as an Emergency Fund
Most companies offer formal paid time off (PTO).
Paying out terminated employees’ accrued and unused vacation time isn’t regulated by federal law, so it is a state by state issue. There are about 20 states that require PTO payout. In states where PTO is required to be paid out to terminated employees, this could be used as a partial security cushion or emergency fund.
Florida, Georgia, and Texas do not require PTO to be paid out upon termination.
However, you should still have funds set aside for emergency events such as a roof leak or the car breaking down. While you can view your accrued PTO as part of your emergency fund, your emergency fund is not just for job loss.
Personally, I like to carry as many PTO days as possible. Then I note my companies rollover policy for the new year as far as how many days I can carry. If I can’t rollover my accrued PTO, then I try and take vacation in December. A lot of companies slow down during the holidays so this can be a good time to take vacation anyways.
Works Cited:
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