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Given the state of the world right now, having an emergency fund is a necessity. Here is everything you need to know about why you need one.
Being financially aware in today’s scenario, is no longer an option. Neither is having an overall financial picture and preparing for untoward contingencies. Unforeseen contingencies never announce their arrival. Hence, it is wise to expect the unexpected and be prepared by building an ‘Emergency Fund.’
Taking into account the current COVID-19, it has wrecked the economy to a great extent and has caused turbulence in all our lives. In such an awful situation, an emergency fund can act as a backbone for several families.
An emergency fund is a distinct fund created by accumulation of money specifically meant to meet unanticipated financial shortfalls. It is a fund one can fall back in times of crisis or for any unexpected circumstances.
These could be rough economic times, loss of a steady, hefty medical costs or indispensable surprise expenses. Adequate preparation for a financial emergency is especially important for low-income households. Few points detailing what an emergency fund is.
Building an emergency fund must be one of our highest saving priorities. This fund acts as a cushion to protect an unexpected financial bomb. It helps us from dipping into our savings and investments. Or plunging into a debt trap.
So, no matter how hard it is to save, it must be created in order to carry a person or family through tough times. It may, to some extent, make an individual feel financially secure and allow them to live a comfortable life.
An emergency fund cannot be built overnight but be done gradually. The corpus can be generated by curtailing some of our non-essential expenses, setting aside ‘found’ money. Other ways to turbocharge the fund is to use the tax refunds or extra income streams.
A good rule of thumb is to have enough to cover three to six months’ worth of necessary living expenses. I believe the spending norm should be followed with a ‘Need to have‘ approach, rather than a ‘Nice to have‘ one. This corpus can vary, depending on the individual’s income, costs, bills, lifestyle, and number of dependents.
Money so saved should be kept in accounts where it is liquid and easily accessible. An automatic bank transfer or a separate direct deposit of a portion of our regular cash inflow will help in accretion of funds in a disciplined manner every month.
The emergency fund is one of the pillars of personal finance. We need to be mindful that keeping the funds in liquid position is meant for a particular purpose and not for high return investment. And need to inculcate the habit of compromising some of our spending. At the end of the day, this is our money which will sail us through some of the toughest financial disasters of our life.
It’s never too late to get started. Looking forward to have a better tomorrow!
Picture credits: Pexels
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Chetan Bhagat had no business slut shaming Uorfi Javed or any other woman. If he wants to 'guide' young men in the 'right direction' then he should take accountability for his words.
Chetan Bhagat, one of India’s bestselling authors, thought it was an ingenious idea to slut-shame Uorfi Javed, an Indian actress and influencer, at the Sahitya Aaj Tak literature festival.
“Phone has been a great distraction for the youth, especially the boys, spending hours just watching Instagram Reels. Everyone knows who Uorfi Javed is. What will you do with her photos? Is it coming in your exams or you will go for a job interview and tell the interviewer that you know all her outfits? On one side, there is a youth who is protecting our nation at Kargil and on another side, we have another youth who is seeing Uorfi Javed’s photos hiding in their blankets.”
Uorfi Javed responded with a video on her Instagram stories calling out Bhagat’s bluff. She shared the screenshots of his previous chat conversations with Ira Trivedi, author and yoga instructor, which came to light during the #MeToo movement.
While boys are taught to naturally own the space they enter, girls are taught to give up, to accommodate, to adjust since "it is their primary responsibility to keep families and relations together."
Yesterday, I was watching these 4 young girls around 16 – 17 years old play badminton. They were having fun, goofing around with all 4 of them equally involved in the game.
In some time two of their male friends joined them, and as part of round robin, the 2 boys replaced two of the girls. All good.
As the play continued, I started noticing a change in the way the game was being played. The shuttle was played most of the times between the two boys and there was a sense of competition and aggression brought in. The other 2 girls playing soon starting losing interest in the game as they hardly got any game time. Even if the shuttle came towards them, the boy in their team would move and play that shot. They soon moved to the sidelines as the boys continued to play.
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