The key points are
What is emergency?
Your future will be safe for establish a emergency fund. Because life is full of unexpected events. So need of emergency fund is necessary. Emergency is a best solution of any unexpected loss, like loose a job, break down of cars, or you have to pay a heavy taxes.Emergency fund allows you to cover medical expenses and get out from debts.Emergency helps you a piece of mind and give confidence to cover expenses like rent and utilities expenses.
How to build an emergency fund.
Calculate your monthly income and your expenses. Make a monthly budget .Use calculator to estimate the exact figure out ,how much you need. Financial expert says, you have three months to six months equal amount for emergency purpose .Suppose you set amount of $ 15000 you save $ 1000 for each month and your target to achieve in fifteen month.
For this purpose you save $ 1000 from salary to accumulate sum of money of $ 15000.
Why is important to keep emergency fund?
Everyone needs money to save for future. It is important for any emergency needs, like loose of job, heavy taxes, or serious illness or any unforeseen medical expenses.Also ,if you have emergency fund, you have to confident in worse condition. Especially, it is emergency fund is important , if you have debts, this will help you to out from debts.In these days corona virus spread all countries, the emergency fund important has increased.Emergency fund is most important thing to set aside some income for yourself.Can I invest my emergency fund? If you have extra funds more than six months expenses then you should invest this amount in stock exchange or any other kind of business.Savings in bank account where you earn few dollar, but I suggest you to invest real estate business which is increased day by day.If investment is fairly liquid, where you withdraw your amount easily.
Where to keep emergency fund?
I suggest you to keep in current account your emergency fund,because you can easily withdraw your money.You should keep your reserve fund in short term investment.Another high yield saving account gives you a facility to keep balance and earn high interest rate and easily access to balance and can transfer money to other person.You save your emergency fund where you quickly access and it is also safe. Your money has not save from inflation, You are loosing your money from year to year.So you invest your money.
What should emergency fund cover?
Emergency fund cover all your unexpected expenses. It is to cover repair of car by accident damage and also repair of house.Emergency fund cover in case your unemployment.Emergency cover to insurance expenses and transportation expenses.This fund cover your extra marriage expenses.Emergency fund cover you everything and give you a solid financial ground.
- How much emergency fund is enough?
Start small even a single penny each month. Then you increase according to your incomes.If you are doing job, then three months salary is enough . If you are self employed then at least six month expensesStart this fund today, so you will breath easier and would be safety place early. It is reasonable time to calculate six month expenses for urgent needs.If you have no extra money to set aside, then you earn more and more. But if you have no time them you cut out your expenses. we are here to help you .
Seriously you should take action to create emergency fund.So create a budget and make a plan in mind and start saving today.You will be amazed , how much money you sum up in short time.Set a monthly goal budget and then jump to next step. If you are saving for goal to start a business or to buy a house, emergency fund helps you to meet your goal. Emergency fund is a great way to protect your savings.Emergency helps you to long term financial goals.If you are working in a secure company then it is good to maintain emergency fund. Is your job safe? If not then emergency fund helps you to get more job quickly.