How to make an emergency fund | Fusion - WeRIndia

How to make an emergency fund

How to make an emergency fund

Life always has ups and downs. It is always better to be prepared for downside in life before it comes. When you find yourself in a tight spot financially, having an emergency fund can be a life saver. Experts suggest that a good emergency fund should meet six months of household expenses which includes all loans. If you want to prepare for the worst case scenario, then prepare a fund for a year.

  1. To have your emergency fund, multiply your monthly expenses with 12.
  2. When you create emergency fund, make sure it liquid. This means it shouldn’t be invested in PPF or ULIPs which have lock-ins. Bank deposits are the best place to store emergency funds.
  3. You do not always have to save the same amount every month. If you fall short in saving in a month, make sure you cover it in the next.
  4. Keep your money in a place which can earn you more. Keep it in deposits to earn interest.
  5. Make sure you do not draw the money until it is absolutely necessary. Vacations do not count. It is called emergency fund for a reason.
  6. Do not destroy your discipline in saving money. If you can’t save much in a particular month, try to save at least a bit instead of not saving at all.

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