{"id":35723,"date":"2024-02-01T10:19:32","date_gmt":"2024-02-01T10:19:32","guid":{"rendered":"https:\/\/tata-blog.osian.dev\/moneyfy\/?p=35723"},"modified":"2024-02-01T10:19:33","modified_gmt":"2024-02-01T10:19:33","slug":"emergency-fund-planning","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/moneyfy\/debt-funds\/emergency-fund-planning\/","title":{"rendered":"Emergency Fund Planning"},"content":{"rendered":"\n

<\/p>\n\n\n\n

It doesn\u2019t matter how well you earn or how wisely you\u2019ve invested if you find yourself on the back foot in the face of emergencies. Yes, life throws you a curveball every once in a while. And you need to have a rainy fund ready to play it well.<\/p>\n\n\n\n

But that\u2019s easier said than done. Many Indians find it difficult to build and maintain an emergency fund. In fact, only 27% of Indians have an emergency corpus at hand, as per a MoneyControl survey.<\/p>\n\n\n\n

If you, too, are struggling to build a financial safety net or constantly find yourself dipping into your savings, here\u2019s a quick guide to emergency fund planning to help you out.<\/p>\n\n\n\n

How to create an emergency fund?<\/strong><\/h2>\n\n\n\n

You cannot build an emergency corpus overnight. You must diligently set aside a portion of your monthly income to build a sufficient reserve. <\/p>\n\n\n\n

In that regard, here are some tried-and-tested tips to help you out.<\/p>\n\n\n\n

1.\u00a0Open a separate bank account <\/strong><\/h3>\n\n\n\n

You\u2019ll want your emergency money to be safe and liquid. A savings account checks both boxes and, therefore, is the best option to house your emergency funds.<\/p>\n\n\n\n

Fixed deposits are also a good idea as they allow you to accrue interest on your funds over time. However, they may not be as liquid as a savings account.<\/p>\n\n\n\n

Besides, many savings vehicles today provide quarterly yields on your funds. So, your money not only stays safe and liquid but grows as well.<\/p>\n\n\n\n

2.\u00a0Start with small but regular deposits <\/strong><\/h3>\n\n\n\n

The key is to make emergency savings a habit and not a monthly struggle. So, it\u2019s best to make small deposits initially. If you start big, it will strain your cash flow too much, and you\u2019ll abandon the routine altogether.<\/p>\n\n\n\n

If you can\u2019t find any financial headroom in your expenses, find something you can live without. You can cut back on ordering out or postpone your shopping.<\/p>\n\n\n\n

3.\u00a0Set an achievable target <\/strong><\/h3>\n\n\n\n

Knowing what you\u2019re saving will give you that extra incentive to keep at it.<\/p>\n\n\n\n

But how do we set this target? Well, it will depend upon the number of dependents that you have. If you\u2019re the only earning person in the household, you\u2019ll need to save enough to cover six months of your expenses.<\/p>\n\n\n\n

If you have a spouse who also works, you can build an emergency fund that covers three months of your expenses. These expenses include food, utilities, bills, and insurance.<\/p>\n\n\n\n

4. Tap into the fund only during emergencies <\/strong><\/h3>\n\n\n\n

Most importantly, use the emergency fund only if you\u2019re out of your job, need to service a long medical bill, or have home repairs to make.<\/p>\n\n\n\n

Lastly, make sure you start saving again. Emergencies don\u2019t have a cooldown period.<\/p>\n\n\n\n

Over to you <\/strong><\/h3>\n\n\n\n

Using your current bank balance or taking out a loan to cover emergencies is a bad idea. At the outset, you won\u2019t have a clear way to differentiate between your daily cash and cash reserved for emergencies. Moreover, going down the debt route to cover financial emergencies can quickly spiral out of control.<\/p>\n\n\n\n

That\u2019s why building a separate crisis fund is essential to tackle emergencies.<\/p>\n\n\n\n

You can also build your emergency corpus with smart investments. Start today with Tata Capital\u2019s Moneyfy app<\/a> and save like never before. Visit our website<\/a> to know more.<\/p>\n\n\n\n

\n
Read More Blogs<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

It doesn\u2019t matter how well you earn or how wisely you\u2019ve invested if you find yourself on the back foot in the face of emergencies. Yes, life throws you a curveball every once in a while. And you need to have a rainy fund ready to play it well. But that\u2019s easier said than done. […]<\/p>\n","protected":false},"author":1,"featured_media":35724,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[71],"tags":[],"class_list":["post-35723","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-funds"],"yoast_head":"\nEmergency Fund Planning: Tips for Financial Security<\/title>\n<meta name=\"description\" content=\"Discover essential tips for effective emergency fund planning and create emergency funds to create financial security. 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