Emergency funds are the money saved in a bank account for emergency purposes. Many people don’t have money for emergency purposes. Some of the emergency requirements are medical expenses, vehicle repair, unemployment, etc. Many people don’t know how to create an emergency fund. Many people try to create an emergency fund each month but they can’t able to create it. In this article, we are going to see how to create an emergency fund.
Why do I need an emergency fund?
An emergency fund is like a life jacket that saves you. If you don’t have an emergency fund you need to depend on others to get money, use a credit card, buy the loan, etc. If you have an emergency fund you don’t need to worry about anything. It will help you to avoid all these things.
How much I should save?
Now you get some idea about an emergency fund. But how much you should save. You should save six times your monthly expense So that if you lose your job or something else like that you can manage that. In the beginning, you start from a small amount. Invest in RD, Fixed Deposit, etc.
Where do I save ?
You should save that money in a high-interest bank account. It should not be a regular account . It should be a separate account. You should not use your normal account.If you use
How do I save ?
Calculate the total amount you want to save.If you calculate the emergency fund you can calculate the monthly goals.“How To Make A budget?”
Have a monthly goals
You should have a monthly goals like I will invest 10 percentage of our monthly salary. The best way is automate this process.If its automatically transfer.
Save your change
When you go to shop you will get more changes .Keep that changes in a piggy bank or in a box.When it fills put it in your bank account.
Save your tax
Every year you will get a tax return.If you save that money you can save more.Directly send that money in to your bank account.
Advantage of having a Emergency fund
- You don’t need to buy a loan or borrow money on your emergency situation
- In month end if you are far away from home and you can easily use that money for that travel.
- It will help you in your unemployment time.
- It will be helpful in your unemployment time
- You will start budgeting. If you want to create a budget check our blog”Best budget apps for college students”
- If any sudden medical expense, it will help you to achieve it.
- You will start saving money for your dream
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