Sudden difficulties are the truth of one’s life. Many times there are situations in life, which have no idea – such as missing jobs, expenses of serious illness or service of the car. In such a time, it is very important to have an emergency fund i.e. emergency fund for financial help. This fund can become a shield of your economic security in the uncertainties of life.
Emergency fund is a money that is saved only for emergency conditions. Its main objective is to help you in such a situation when your income suddenly stops or the expenditure increases a lot. According to experts, every person must keep an amount equal to at least 3 to 6 months everyday expenses in their emergency fund.
To create an emergency fund, first prepare the budget. Calculate your income and expenses and see where some money can be saved. Then according to this, every month start pouring some amount in the emergency fund. If you want, you can automatically transfer a fixed amount from your salary every month so that it continues to accumulate regularly.
If you get sudden money received like bonus or tax refund, then add them to the emergency fund. As long as there are loans like credit card or high-interest loan on you, it is necessary to repay them first. After that put the remaining money in the emergency fund.
Keep this fund in a high-aged savings account or money market account so that the money is safe and can be withdrawn immediately if needed. Keep in mind that use this fund only in real emergency – such as medical expenses, missing jobs or necessary repair of home.
Keep checking the emergency fund from time to time and if you ever have to use, fill it as soon as possible. Do not invest this fund in risky places like the stock market. Apart from this, let family members also definitely tell about it so that they can use it properly if needed.