What do you do when an essential thing comes to you that needs money? In our house , ones health becomes worse, or have a tool damaged at home. Any loss of work or business, when that happens, it can be very difficult to keep up with our expenses. It is a project that is very easy to manage and is about to be announced today. When we need money ,we go for a loan or we withdraw money from our investment . But it can take a lot of time and it can be a loss. The emergency fund aims to reduce the maximum loss and how we can manage the money in times of need.
Emergency fund means that we are managing our finances for something that comes into our lives without our expectation. If our cost is Rs 30,000 a month ,then the average 6 month cost is Rs 1,80,000. This amount should be invested in one of the earliest investment plans that we can get us quickly as we can,minimise the losses. Today we are going to tell you how to do it is systematically.
6 months is an average estimate . If you are a government employee, their pay is safe and the job is safe. If that is the case, you should keep your emergency fund for 3 or 4 months.At the same time, if you are working in an unstable IT sector or sales and marketing sector and so on ,you may want to keep a larger emergency fund. ( 7 or 8 months worth of money )as an emergency fund. So 6 months are not the last word to take. Depending on your comfort level ,the key is to bring an amount . When calculating how much emergency fund we need, the most important thing to think about is our expenses.
First of all ,calculate how much we will spend on daily expenses. Similarly if you have to pay for insurance policies, find out the cost. If you have to pay of the loan monthly, find out what it is. If there are other installment schemes, find out how much it’s monthly installment. All these amounts will add up to your average monthly cost . Even if you add a few amounts from it. Suppose we get RS 50,000 .
If we make 8 months emergency fund, we need Rs 4,00,000, when we add RS 50,000 for 8 months . Thats way you can calculate how much emergency funds you need.
Now let us see where the emergency fund will be kept . It is our opinion that the emergency fund should be kept at three or four stages. The emergency fund we have calculated is Rs 4,00,000. Try to keep it as a 5% in cash Rs 20,000 . With this cash tell them to save, you know why? we need cash for something essential. At that time sometimes we can’t to go to ATM . After that 35% in this situation ,Rs 140,000 deposit in one or two bank accounts. If we find it difficult to take out a bank at the some point ,approach the next Bank. So we put 35 % in two banks .
Save 30% as fixed deposit in these bank accounts. In this situation, 30% means Rs 1,20,000 . Why we keep 1,20,000 in a fixed deposit? once you put it all on SB, from saving Bank’s get 4 % interest . But when it comes to fixed deposit, there is a possibility of getting up to 6.5 % interest. So we have the potential to get a little more interested into that money. That is why ,we were told to put some amount of FD.
Be careful to put in fixed deposits that are in online banking accounts. Because we may not have enough money to go to the banks and withdraw money. so we have the option of closing and making money online as a premature. Now 70% of consumption is over. The balance amount has a 30 % . If it is one or two days worth of situation you can invest 30 % of that in good debt Mutual Funds. If we invest this, we will get the money in one day or two.
Some Mutual Funds offer instant credentials. Up to Rs 50,000/ 90 percentage of our investment will be paid in credentials. You can invest in either this mutual fund/ debt/ liquid mutual funds. So we saved a few money in cash. We saved a few extra money in savings bank accounts. About as much, we put it into a fixed deposit. The rest of us have been deposited by debt mutual fund too.
This four types of investments for 4 purposes.
- If we want quick cash,we need cash.
- if we want it’s only after 5 to 10 minutes ,we can take it into your SB account via ATM.
- If we want after an hour and a half ,we can take from the fixed deposit via online as redeem.
- If we want after one or two days later, we can take out the mutual funds.
There is a reason we put this in splits. When we can’t put in cash 4 lakh, because the value of money is decreasing ,with cash passing day, we are at a loss . Not everything is kept in savings bank and there is we only have 4 % interest. Why not put everything in to your fixed deposit ,sometimes we may not get it when we need.