Budgeting Guide #91: Emergency Fund — What It Is, Why You Need One, and How to Build It Fast

 

Don’t Let an Emergency Drain You — This One Fund Can Save Your Financial Life

Your emergency fund is your first line of defense against job loss, medical bills, or family emergencies. It’s your peace of mind in a bank account.

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🚨 What Is an Emergency Fund?

Cash saved only for urgent, unplanned expenses like:

• Medical emergencies
• Sudden travel
• Job loss
• Car/home repair

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💡 How Much Should You Save?

Minimum: 3 to 6 months of your monthly expenses

Example:
Monthly expenses = ₹20,000
Emergency fund = ₹60,000–₹1.2 lakh

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🪙 Where to Keep It

• High-interest savings account (not FD)
• Liquid mutual funds
• Don’t keep in cash or in your main spending account

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🧠 How to Build It Fast

• Save windfalls (bonuses, refunds)
• Cut 1–2 monthly subscriptions
• Sell unused gadgets
• Do a 30-day no-spend challenge

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✅ Conclusion

Build your emergency fund before investing or splurging. It’s not optional — it’s essential survival money.

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