Emergency Fund means money kept somewhere which can be used at the time of an emergency. The purpose of an Emergency Fund is to develop financial security by creating a safety account that can be used for unexpected expenses, such as illness or major home expenses.
Assets should be in the form of cash or tend to be highly liquid funds. This can reduce the chance of using high interest funds, such as credit cards or unsecured loans, or using your future security Retirement funds.
Emergency Funds should typically have 3 to 6 months but Covid 19 situations teaches people to have emergency funds for at least 1 year.
The size of an emergency fund should depend on many factors such as your expenses ,lifestyle and debts. Your Emergency Fund will help with medical expenses or your job loss periods expenses.
You can start saving every month 2% to a modest fund and slowly increasing your contribution rate for a few months. Even a small modest fund will help you to face the unforeseen crisis situation.
It’s very important that you shouldn’t use these funds for any other purpose. So make sure to use this fund only at your real emergency time..
Storing cash in a savings bank account may be the safest option. There are many places to save your emergency funds, such as a money market account, high interest savings account, no penalty certificate of Deposits, which don’t charge when you encash your money before the maturity date.
Hope this small emergency fund info will help you, not only in building an emergency fund but also in real time. So I’ll come with many helpful information on finance in the near future. For any kind of Retirement Planning or buying insurance, do contact our license holding team PLENTYSURE, in the USA (www.plentysure.com). And just click the link & buy. easily. https://agents.ethoslife.com/invite/d902e
Do you have an Emergency Fund for you ?
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Team PLENTYSURE
Jyoti Prakash Nayak, B.Sc MBA BA CFP
CERTIFIED FINANCIAL PLANNER & FINANCIAL WRITER
E: moneygrains.invest@gmail.com / WhatsApp: +91 8792238909
