This whole COVID 19 situation has made us realize that emergency fund is so much important. There is nothing certain in life nor your life nor your income. My friend Gaurav is a 30-year-old pilot with Indigo and his wife Ritu, 28 is cabin crew with indigo only.
They both were earning a good and never in their dreams thought about the situation when the entire aviation department will come at halt and planes will be landing at the airport. This situation is not of India, but the entire world is at a halt, nobody is traveling, no travel plans are on board. Everybody is stuck at home and trying to remain alive in this COVID situation.
Despite being in such a good position they couldn’t build a corpus which they could use in times when income cut down. Right now the entire health and aviation department is stuck hard due to the virus, thus both Gaurav and Ritu fear the cut in their salaries or worst loose their jobs.
At times like this contingency or say the emergency fund would have given them a cushion to lie on. However, it’s never too late to start building an emergency fund. What Gaurav and Ritu need right now is to lay down rules and cultivate discipline with their money in order to have an emergency fund.
The first question is, how much money is enough money for the emergency fund?
- Calculate your monthly expenses (only needs), and multiply it by lose and that is your emergency fund.
- Also factor in liabilities like loans, EMI’s you may be servicing for now.
- Then think of ways in which you can arrange this amount of money at regular intervals.
- And decide whether you want to save your money or invest.
A good way of creating an emergency fund is to set aside an amount of money each month and then plan your spending on the rest left amount. Starting an investment is easy but canceling it requires an effort that one might not put unless absolutely necessary.
Happy Investing!
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