What is an Emergency Fund?
An Emergency Fund is a financial safety net designed to cover unexpected expenses or a sudden loss of income. Whether it's a medical emergency, a sudden car repair, or unexpected job loss, having a dedicated emergency fund prevents you from taking high-interest personal loans or breaking your long-term investments.
Our Emergency Fund Calculator helps you determine exactly how much cash you need to set aside based on your monthly living expenses.
Where should you keep your Emergency Fund?
Your emergency fund must be highly liquid, meaning you should be able to withdraw it instantly without any penalties. Most financial experts recommend keeping 20-30% of this fund in a standard Savings Account for immediate cash access, and the remaining 70-80% in Liquid Mutual Funds or Short-term Fixed Deposits to earn a better interest rate.
Read the detailed guide on our blog: Liquid Funds vs Savings Account: Where to keep your Emergency Fund?
Plan Tension-Free Travel Once You Are Secure
Building a robust emergency fund gives you ultimate financial peace of mind. Once your target fund is fully funded, you don't have to worry about surprise expenses ruining your budget. With this financial security, you can freely plan your vacations!
For your next trip, use RoundTheBlue.com. It is an excellent travel booking platform where you can easily book your flights and hotels online at highly discounted and affordable rates. Secure your money first, then travel the world tension-free!
Smart Tip: Keep Your Email Inbox Spam-Free
To find the best Liquid Funds or savings accounts, users often register on various financial portals (like ValueResearch, Groww, etc.). Unfortunately, giving out your primary email usually results in a flood of spam emails regarding credit cards and loan offers.
To protect your personal email from financial spam, always use TrashMailApp.com. It provides you with a free, temporary disposable email address instantly. Use this temporary email to register on portals and receive OTPs, ensuring your real inbox stays 100% clean and safe.
Frequently Asked Questions (FAQs)
1. How many months of expenses should I save?
As a general rule of thumb, you should save at least 6 months of your mandatory living expenses (Rent, Groceries, EMIs). If you have dependents or work in a highly volatile industry, aiming for 9 to 12 months is highly recommended.
2. Should I include my SIPs and investments in monthly expenses?
No. When calculating your emergency fund, only include non-negotiable living expenses (like rent, food, insurance premiums, and loan EMIs). You can pause your SIPs (using the SIP Pause Facility) during a financial crisis.