2024-08-19 04:25:58
New Delhi: Rohit is a senior manager in a private company. Till a few years ago, he used to spend freely whatever he earned. He had no savings. Once, for some reason, he lost his job. As soon as he lost his job, his financial condition worsened. He became dependent on every penny. During this time, he read about emergency fund. He thought, if only he had created an emergency fund, he would not have to see these days today. After some time, he got a job. After this, he first started creating an emergency fund. Every person must create an emergency fund. Emergency fund is the amount that can be used in times of crisis. Money can be deposited or invested anywhere in the form of emergency fund. Keep this amount in such a place from where it does not take much time to withdraw it. When the emergency fund is used in the financial crisis, then start creating it again when the financial condition improves.
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How much should the emergency fund be?
The first question that arises is how much money is sufficient as an emergency fund? Different experts have different opinions about this. Some say it is equal to 3 months of monthly expenses, while others say it is equal to 6 months. However, most experts recommend that the emergency fund should be at least 6 times the monthly expenses.
It is believed that one usually gets another job within 3 months of losing a job. The loss incurred in business also starts getting compensated within 3 to 5 months. The emergency fund should include the amount of daily household expenses, home loan, vehicle loan, insurance premium etc. If you have children and they go to school or coaching, then include the children’s fees in it as well.
This is how you can collect money for an emergency fund
Start creating an emergency fund while doing your job or business. Withdraw some amount from your earnings every month and start investing it in a bank account or investment scheme. If your monthly salary is Rs 50,000, then it would be better to invest 10 percent i.e. Rs 5,000 every month in an emergency fund. When the amount equal to 6 months’ expenses is collected, then start investing in other schemes for a better future.
Deposit emergency fund here
The amount deposited or invested as emergency fund should be in such a place that it can be used immediately or within 24 to 48 hours in case of emergency. Do not keep the entire amount in the bank account. Keep most of the emergency fund invested in such schemes where the value of rupee increases. You can also invest some amount in mutual funds through SIP.