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An emergency fund is always helpful to everyone when designing a financial plan. A variety of media and other financial experts are always on the lookout for this emergency fund. But the reasons are not known but many people are neglecting this emergency fund.
Need an emergency fund?
When a family man loses his job due to unforeseen circumstances, this emergency fund can be used for a wide range of financial activities that depend on him.
Many people around the world are currently losing their jobs and facing financial problems due to the corona epidemic. Others are subsisting on Covid-19 due to a monthly wage cut and maintaining a low-wage family.
Apart from the above, this emergency fund is also needed by everyone for unforeseen health problems.
Determining the emergency fund amount: –
To determine the appropriate amount to keep in an emergency fund, you should consider the following:
1.The amount you are comfortable staying away from family
2.Gaining financial stability.
3. The working condition you are currently doing
4.Your financial responsibilities.
How to calculate emergency funds?
The emergency fund can be defined as the sum of three months to six months’ average basic living per month for a person maintaining a family.
However, some people are more likely to need a large number of emergency funds in some cases.
In particular, an emergency fund depends on a variety of factors, such as the person’s employment policy as a family-owned, the family members who depend on him, other people earning in the family, the investments made by the householder, and the sum insured paid.
Truth be told about the Emergency Fund, if there is only one person in any family earning, it is very important that such a person must set up a total salary of six months as an emergency fund. It would be very useful for them to increase this emergency fund over a period of 9 to 12 months.
Based on the above, it is very important for an individual to have an emergency fund as part of his financial plan. He should check the capacity of the emergency fund from time to time, without simply setting up the emergency fund and realizing that his responsibility has been fulfilled.
A person who is responsible for the maintenance of the family in a family, when he or she is away from earning, the Emergency Fund is able to maintain the basic necessities of life for his family for a few months, such as food, house rent, loan EMI, school fees for his children, insurance premiums and other household expenses. Make sure the tats are usable.
Outlines of Emergency Fund: –
When investing money in your emergency fund, keep in mind that under no circumstances should the income from the emergency fund be of prime value. This is because the emergency fund should always be kept in the liquid stage. Above all it is important to remember its safety. The emergency fund should be planned in the form of a savings account or bank fixed deposits and liquid funds.
This article tells you that you need to be fully aware of this Emergency Fund which is a must use at some point in everyone’s life.