07_Epi_$...What is an Emergency Fund?...$

Fin Buzz

Hello Listeners

Welcome to the 6th episode of our podcast

I hope you all listened to our previous episode if not please do listen to episode 5 is all about Exchange Rate.

Moving into our today's episode

We will be discussing Emergency Fund

What is an Emergency Fund?

An emergency fund is a readily available source of assets to help people navigate financial dilemmas, such as the loss of a job, sudden illness, a major repair to your home or car.

Managing your budget can be stressful, especially if you have an emergency pop up. there is a way where you can prepare for your unexpected financial emergencies.

In Simple terms saving money aside from your regular income for your budget, it acts as a financial safety to overcome unexpected expenses.

not to mention the kind of major national crisis the coronavirus pandemic has created.

An emergency fund is a very important part of financial planning which can help you to improve your financial security by creating a safety net cash that can be used to meet your emergency expenses instead of taking high-interest rates from your credit cards or any unsecured loans and also it can impact your retirement plans as well.

It doesn't mean that creating this fund will solve all your money problems, it is only a key to give support when you facing tough times about money like job loss, etc.

Let discuss a few major situations why we need to have an emergency fund:

1. When you are in Job loss these funds can replace your monthly income.
2. No need for hunting for debts.
3. You can still maintain your lifestyle even when you are in crisis.
4. Sudden medical expenses even though you might be having medical insurance but we need to have a minimum amount right.
5. You can have benefited from added peace of mind.

So How much do we need to save for our emergency fund?

An emergency fund will vary from person to person situations, most of the financial experts suggest at least three to six months of your monthly expenses.

however, don't worry about saving your emergency fund overnight that's wrong assumptions.

How to build an emergency fund?

Basically, before talking about this fund first and foremost we need to understand how much amount can be saved on a regular basis so we need to calculate our regular monthly expenses which are inevitable or which cant skip preparing those lists and plan accordingly. An emergency fund can also be divided into two main aspects

1. Short term
2. Long Term

Above these two terms can vary based on the requirement maybe you have a secure job and steady income stream which may need less emergency fund but if your income is not steady and secure for those who are planning their money into retirement plans by this sudden crisis this might impact a very big number in your long term plans so to avoid such instance we have to make our emergency funds first priority and then save your money in investments.

Saving money can be done in any form like saving cash by yourself, opening a saving account which can generate some interest amount for the amount you are going save

Also, there are many schemes out in the market which can save your money with some decent interest rates.

I hope you all like the content and also please share your valuable feedback in any of the podcast platforms you are listening to.

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that's all for this episode.

Thank you for all the listeners.

Signing of

your host Krishna