Life is so unpredictable. Anything can happen anytime. Accidents occur, people, fall ill, people get diseases, etc. Essentially, man is mortal and this is proven by emergencies, especially fatal ones.
When an emergency strikes you, you struggle a lot and try to arrange money by borrowing from different sources such as your savings, some investments, family and friends, moneylenders and banks and financial institutions. Instead of depleting your savings and investments or borrowing from others, don’t you think it’s better to have separate funds kept especially for emergencies? India’s First Online Financial Services Advisory, Moneymindz
What is a Contingency Fund?
A Contingency Fund also called an Emergency Fund and rightly referred to as a Rainy Day Fund, is a corpus allotted to pay for unexpected events and emergencies such as loss of employment, hospitalization, etc. You save for these unanticipated events in advance so that when disaster strikes you have your emergency fund to help you.
Ideally, six to twelve months of your income should be stored in an emergency fund. This, in fact, is recommended by experts. During times of emergency, you usually require lots of money. That money will be given by your emergency fund. India’s First On call Financial Services Advisory, Moneymindz
How to start my Contingency Fund?
Do not worry. It’s simple. Just maintain a budget where you track your monthly income, expenditure, savings, investments, insurance(Life Insurance, Vehicle Insurance, Health Insurance etc..), financial goals and the timeframe by which you want to achieve each goal. First Free Financial Advisor, MoneyMindz. Timeframe goes like short-term (3 years), mid-term (3 to 5 years) and long-term (5 years). Once you are done with all that, open a regular savings account and label it your “Emergency Fund”.
That means you start depositing money regularly into the “emergency fund” account without fail. Save till you have accumulated 6 to 12 months of your monthly income but don’t stop right there. Continue saving. Ensure the “emergency fund” account is easily accessible during emergencies. Smart Financial Advisor, Kuber Mindz
What not to do with my Contingency Fund?
This is a good question. You ought not to do the following with your Emergency Funds:-
- Making ends meet
- Purchasing wants and other luxuries
- Using the same for Retirement (instead of keeping a separate Retirement Fund)
Keep some cash with yourself because when disaster strikes you might not be in a position to go around looking for an ATM. If you don’t want to face the consequences of a sudden emergency which surely will drain your savings or make you take extra loans, start your emergency fund now. For more information visit www.moneymindz.com or give a missed call to 022-62116588.