Valam
An emergency fund is money set aside for surprises such as a medical bill, a job loss or an urgent repair. It keeps one bad month from becoming a debt problem.
A simple rule of thumb
Many planners suggest three to six months of essential expenses. Choose the higher end if your income is irregular or you support dependants. Essentials mean rent, food, EMIs, insurance and utilities, not everything you spend.
Work out your number
If your essentials are 30,000 rupees a month, six months is 1,80,000 rupees. That can look large, so build it in stages.
- First target: one month of essentials.
- Second target: three months.
- Final target: six months or your chosen goal.
Where to keep it
Choose safe and easy to reach places such as a savings account or a liquid deposit. The goal is access and safety, not high returns.
Make it automatic
Move a fixed amount on salary day into a separate pot. Treat it like a bill you owe to your future self.
Create an emergency goal in Valam, link a savings pot and add money as you go. Valam shows if you are on track and what a runway of savings means in months.
#emergency fund#savings#safety
