Tuesday, November 24, 2020
Home BUSINESS Why You Must Have An Emergency Fund?

Why You Must Have An Emergency Fund?

Life is completely unpredictable. A sudden business loss, job loss, unexpected bills, car breakdown, theft and much more can cause you a lot if you are not ready. It may cause stress and can drain you both financially and mentally as well. This refers to be the most important reason to be ready with Emergency fund.

Financial planners and experts of the industry always suggest having a contingency fund for every working individual. Keep some ready to use cash and use it in unexpected time will help you a lot for the successful growth. This will protect you from getting yourself stuck in debt.

LinkedIn Top Ranked 25 Startups In India

A Separate Fund in Need

If you don’t have a sufficient amount to deal with any emergency then what will you do? YOu might ask your family and friends to help you and there is no surety that you will get the required assistance on time. You might have to opt for a personal loan that is easily available these days. However, the same you will add another burden of EMIs for the next few months.

Borrowing a sudden amount will not only affect your budget but also impact on your savings as well that you may have kept for other goals. If you draw funds from your investment and saving options such as PPF or mutual funds then you are putting several goals at stakes.

What Is The Right Amount?

As per the experts of the industry, the emergency corpus should be equal to around 7 to 8 months of your expenses. The ideology behind the same is to have sufficient funds to deal with regular expenses in case of any emergency. The corpus usually depends upon the individual’s lifestyle expenses, family members, liabilities, total income, etc.

Ideas For Investment in Gold This Festival Period

How To Build the Corpus

The simple rule of financial planning is to save around 10 percent of income for emergencies. You should start the same from the first day when you receive your paycheck. Building a corpus should be your top priority.
A liquid fund or short-term fund debt are the best avenues to place your emergency fund as they provide instant withdrawal. The focus should be to make sure about the liquidity and safety of the corpus and not chase returns.

Ways to Improve Your Business Sales?

Keep in mind that the estate and gold ornaments should not be seen as a fall-back option for emergencies. They are illiquid and comprises of several costs. Moreover, you have to build a pillar to post to carry out the transaction.
An emergency fund is the need of every household and business as well. We all are not aware of the future and the unwanted situations waiting for us in the future. But we can prepare ourselves to deal with the same easily.

Startup? Here Are Two Simple Ways To Promote Your Idea

Shehnaz Ali Siddiqui
Shehnaz Ali Siddiqui is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing around Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

The wealth of investors of 8 of the top 10 companies of the country increased by about Rs 1.45 lakh crore

Last week, there was a strong shopping in the market. Tata Consultancy Services (TCS) and HDFC Bank benefited the most from the strength of...

How To Start Cosmetic Business?

Before starting the cosmetic business should understand the basic things. Let's know how to start your own cosmetic brand. FDA regulations regarding the production and...

How To Start a Startup Business in India?

Do you want to start a business, are thinking of doing or are you thinking of starting a startup, then this article is a...

How To Start Paper Plate Making Business in India?

How to start the business of making paper plates - Whenever you go to eat food at a wedding, you eat there on a...