Emergency Fund: Do not make the mistake of considering gold and real estate as emergency funds. Property and gold will not be able to help if you want immediate money.
Financial emergency is never mentioned. In case of unwanted and unseen situation, if your salary is halted or reduced, how will your expenses go? For similar difficult times, it is necessary to have an Emergency Fund. The situation can be anything – job loss, illness, accident or corona epidemic which can eclipse your earnings. According to Hemant Rustagi, CEO of WiseInvest Private Limited, consider the Emergency Fund to be a First Aid Kit in a house – the first and immediately it is treated as soon as someone gets hurt in the house. Similarly, you should have a first aid kit of this emergency fund to deal with the injury of financial life immediately.
How to create an emergency fund?
You should have at least 6 months’ expenses as Emergency Fund. Make a list of all your expenses, ranging from ration, electricity, internet connection bills to loans, rent, insurance premiums and investment installments, accounting for every money that goes out of your pocket. Keep this expense equal to 6 months. Emergency can also be prolonged, so if possible, you can prepare for 9 months to a year. Hemant Rustagi says do not make the mistake of investing money from the emergency fund. Keep it in such a place where you can remove it immediately. For example, you can keep your savings in a bank account, make a short-term fixed deposit or put it in a short-term liquid fund.
Emergency Fund: Avoid These Mistakes
Do not think that you will never need an emergency fund and if you need it, there are friends and relatives. Even friends and relatives will not be able to help in situations like Corona epidemic. Once an emergency fund is created, it is also important to keep increasing it. Do not make the mistake of considering gold and real estate as emergency funds. Property and gold will not be able to help if you want immediate money. It takes time to sell real estate. You will need some money and the cost of real estate will be in lakhs. Gold is also not required to be sold immediately, and at which price you have to sell it is also not decided. Be it gold or property, they cost more and it is not easy to sell.
