I recently had to break my emergency fund.

Why?

I dropped my phone by mistake.

A hefty sum I had to pay.

Rs 35,000 for the damn display! 

But, I didn’t take it from my savings account because I still have an entire month to survive.

So, what did I do? How did I clear the bill?

I USED MY EMERGENCY FUND! 

Imagine your emergency money, ready to save the day when life throws unexpected curveballs. 

Emergency funds are like your superhero savings account, there to rescue you from surprise expenses like sudden car breakdowns, medical bills, or unexpected job hiccups.

What’s the Magic Number?

Financial wizards suggest having three to six months’ worth of living expenses stashed away for emergencies, ideally in a separate account.

What is Quick Access Power?

It should be Liquid and Accessible, keep your emergency fund in places where you can grab cash easily, like a savings account. You want your cash to be ready for action when trouble strikes!

Separate from Regular Savings, your emergency fund is not for splurges or planned goals. It’s like having a secret vault that you only open when real financial villains appear.

Also Read: How is mutual fund income taxed?

How do you build an emergency fund?

Tiny Contributions, Big Results!

Regular Contributions by building your fund don’t mean dropping a fortune all at once. Regular, even small, contributions over time should be ideal.

Quick Refills

Replenishing after every use – If your superhero fund swoops in for a rescue, make sure to give it a quick refill so it’s always ready for the next financial battle.

Where can one stash away emergency funds?

A portion in savings account, a portion in FD and some in Liquid funds.

Reducing Financial Stress by having a fund gives you peace of mind.

So, think of your emergency fund as your financial superhero, always ready to act when life gets a bit villainous!