Emergency Fund Calculator: If for some reason you lose your job, and spend a few months searching for a new job, then how will you manage your household expenses and other work, because your bank account will remain empty.
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If you are doing a private job then you will be getting salary every month. Some people start spending lavishly as soon as they get their salary and then at the end of the month the entire account becomes empty.
After that, to meet the expenses one would have to take loan from someone or take help of credit card. Why does this happen, have you ever thought about this? Most of the people are not serious about this, because they think that they are getting salary every month, so why worry?
If you spend the entire salary in the same month and start counting the date of the next salary, then be careful, because when you have a job and are getting salary at the scheduled time every month, then you are not able to save anything.
If so, then how will we manage in the economic crisis? For example, if due to some reason you lose your job, and spend a few months searching for a new job, then how will your household expenses and other work be managed, because your bank account will remain empty.
Why is emergency fund necessary?
Actually, here we are talking about emergency fund, everyone should keep an emergency fund with them. Especially if you are doing a private job, then prepare your emergency fund on priority. Because this will become your biggest support in emergency. When you do not get your monthly salary, you will be able to use the emergency fund at that time.
If there is no emergency fund in such a situation, the problems will increase further. Because how will the monthly expenses be covered? If you live with your family and do a private job, then first of all keep your emergency fund in a separate account.
Now the question arises that how much emergency fund should there be, and how to prepare an emergency fund? Because someone’s income is Rs 20 thousand per month and someone earns Rs 1 lakh per month. Then how to prepare for emergency? Financial experts say that as soon as you start a job, the first thing you should do is create an emergency fund and use it only in emergencies.
According to the rules, there should be money equal to at least 100 days’ expenses as emergency fund. However, if the family is big and there is less stability in the job, then the expenses of 6 months should be in the emergency fund.
Emergency fund is necessary for everyone
For example, if someone’s salary is Rs 50 thousand per month, he should always keep at least Rs 1.5 lakh as emergency fund, which will be useful in case of trouble. Whereas if the monthly salary is Rs 1 lakh, then Rs 3-5 lakh should be kept in a separate bank account as emergency fund.
Try to keep this money in a savings account, so that you can withdraw it immediately if needed. Now you can decide for yourself that your emergency fund should be three times your salary. Keep this money in a separate account. It is not necessary to withdraw from this fund every month. Use this amount only in emergencies, like if you lose your job or fall ill suddenly. Apart from this, you can use this fund in whatever emergency happens.
Prepare emergency fund with this formula
Now let us tell you how to prepare an emergency fund? First of all, save 30 percent of your income. Out of which invest 15 percent, transfer the remaining 15 percent to an emergency fund account. This trend should continue till then. Until three times your salary is deposited in the emergency fund account. If there is a threat to the job, then the emergency fund should cover the expenses of up to 6 months.
Apart from this, efforts should be made to have a separate bank account for emergency fund, so that frequent transactions are not done. Once the emergency fund is ready, do not withdraw money from it for small needs. But if there is any emergency, then use this fund blindly and as soon as the situation becomes normal, then first prepare the emergency fund, so that it can be used in future. Another special thing is that emergency fund is not necessary only for family members, even if you are alone then keep emergency fund on the top of your priority list.
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