April 26, 2023

What to consider before building an emergency fund?

Having a stable emergency fund is an essential component of personal finance. It provides a financial cushion during unexpected events such as job loss, illness, or unforeseen expenses. A well-planned emergency fund can be the difference between financial stability and financial ruin in times of crisis. However, before building an emergency fund, it's important to consider various factors to ensure it serves its intended purpose. But first, let us understand what an emergency fund is, and why it is important to create an emergency fund.

What is an emergency fund?

An emergency fund is a financial safety net for unexpected expenses and ensures financial security. It should be in an easily accessible account such as a savings account or money market account. Ideally, it should have three to six months of living expenses and be separate from other savings. It will help you avoid taking on more debt and using high-interest credit cards to cover emergency costs.

Steps for setting up an emergency fundHere are the steps you can follow and have the funds necessary to cover any unexpected expenses:

  • Define your emergency fund goal: The first step in setting up an emergency fund is to define the goal. Consider how much money you need to save to cover any unexpected expenses.
    • Figure out how much you can save every month: Next, determine how much money you can save each month towards your emergency fund. Consider your current income and expenses, and decide on an amount you can save without compromising other important goals.
    • Open a high-yield savings account: You should open a high-yield savings account dedicated to your emergency fund. This type of account will earn more interest than a traditional savings account, and the funds will be easily accessible in case of an emergency.
    • Automate your savings: Automate your savings to ensure you are consistently adding to your emergency fund. You can set up an automatic transfer from your checking account to your savings account regularly.
    • Adjust your fund according to your needs: As your financial situation changes, you may need to adjust the amount of your emergency fund. Make sure your fund is adequately-funded to cover any unexpected expenses.

Conclusion

Before building an emergency fund, it is important to consider the financial goals, the amount of money to save, the timeframe to achieve the goal and the best place to keep the money. It is also important to think about how to create an emergency fund. Plan it out well and make sure to stick to it. By assessing these factors, one can create an emergency fund that is tailored to their specific needs and goals.

Disclaimer

The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.

Never miss a trading opportunity with Margin Trading Facility

Enjoy 2X leverage on over 900+ stocks

Upstox Margin Trading Facility
Apple Logo
Downloadlogo
iOS App
Google Play Logo
Downloadlogo
Android App

RELATED ARTICLES

Top 10 Balance Transfer Credit Cards and their Benefits

Balance transfer credit cards provide an effective way to manage credit card debt by saving on interest costs. We've compiled a list of the top 10 balance transfer credit cards, each with its set of unique benefits that include competitive introductory APR periods, cashback rewards, and lifestyle perks. These cards are super helpful for consumers and help simplify debt management making them valuable tools for improving financial health while achieving debt reduction goals. Credit cards have fast emerged as a convenient and flexible mode of payment. They, however, can quickly turn into a financial burden when there is an overdue with a high-interest rate. This overdue is usually termed as a credit balance, which can multiply quickly, taking the sum to an exorbitant amount. Thankfully, balance transfer credit cards allow you to transfer your outstanding credit card debt to a new card with a lower interest rate. This means you save on interest costs and can pay off your debt more efficiently. Read on as we explore the top 10 balance transfer credit cards available in India with the benefits they offer.

Ujjivan Small Finance Bank Customer Care Number & Balance Enquiries

Ujjivan Small Finance Bank has been working actively to uplift the economically backward section of society. This financial organisation is based in Bangalore and has spread to all parts of the country with its financial services. If you are a customer of this bank and facing any issues with their services, you can get it resolved by contacting the Ujjivan Small Finance Bank customer care number. Scroll down for detailed contact information of Ujjivan Small Finance Bank’s regional and principal nodal offices!

PNB Net Banking - Login & Registration

- Did you just order your weekly dose of medicines online - Did you catch up with the now trending web series? - Did you also do a surprise check on your child's online learning activity? Thanks to your preference, India’s consumer digital economy is expected to witness a 10 fold rise over 2020-2030 to become a US$800 billion juggernaut. India's banking sector too is witnessing a rising trend towards cashless transaction, adoption of netbanking services even by the not so tech savvy customers who find it 'user friendly' to execute their transactions online. It's all about convenience right? You can operate your netbanking account 247365 anytime / anywhere in a safe and secure manner. Let us say you have a traditional /physical account with Punjab National Bank ( PNB), the second largest government-owned bank in India with an asset base of ₹1,339,301 crore ( FY2022). Headquartered in New Delhi, the bank was established in 1895, infact, PNB was India's first Swadeshi Bank, run by Indians with Indian capital.

What is MMID in Axis Bank? 

Festive occasion or a medical emergency, your family and extended family need funds and need them urgently.However, they don't have access to netbanking. Is there a way I could make the electronic fund transfer through my mobile phone? Can they receive the funds quickly and safely? Vyola! Technology is indeed transformational and disruptive and has revolutionised India's digital banking sector, making fund transfers accessible to everyone in every corner of the country by using mobile phones as the medium. You can now make instant 247 interbank electronic fund transfer to individuals and enterprises anywhere using your mobile phone throughout the year including Sundays and bank holidays This is where the concept of MMID, Mobile Money Identifier comes in. In simple terms, MMID is a seven digit code which is typically a combination of your mobile number and bank account number which allows for interbank transfers via the mobile banking platform. Customers can transfer and receive funds via Immediate Payment Services (IMPS) using their registered Mobile number and Mobile Money Identifier (MMID). Introduced by the Government of India in 2010, MMID was a step up to the two commonly used transfer methods – the Real Time Gross Settlement or RTGS fund transfers and the National Electronic Fund Transfer or NEFT service. Unlike RTGS and NEFT Services which require net banking facilities to function, with MMID, one could transfer funds to the beneficiary's account electronically using a mobile phone. As long as you have a phone number linked to your bank account, you can receive fund transfers via MMID. All you need is the mobile number, account number and the IFSC details of the payee.