Savings Guide
Why do you need an Emergency Fund?
Life is unpredictable. An emergency fund protects you from going into debt when unexpected costs arise, such as:
- Job Loss: It buys you time (3-6 months) to find a new job without stress.
- Medical Emergencies: Covers costs not paid by insurance.
- Car/Home Repairs: Sudden breakdown of appliances or vehicles.
Where should you keep this money?
Do not lock this money in stocks or real estate. It must be highly liquid.
Best places:
- High-Interest Savings Account
- Liquid Mutual Funds
- Sweep-in Fixed Deposits (No penalty for breaking)
Rule of Thumb
Salaried (Stable): 3-6 Months of expenses.
Freelancer / Business: 6-12 Months of expenses (due to variable income).