Emergency fund is one of the important pillars of financial planning.As advised in earlier post,once you start tracking your daily income and expenses,you will come to understand how much money you require per month for your essential needs.You should open a savings account in nearby Nationalised bank and start accumulate money for six months essential needs.This is your Emergency fund.Keep it in savings account and should be kept in Nationalised Banks only.
Do not worry about the size of the money you required.Start to accumulate is important.Take initial steps like Opening a bank account.Start to deposit at least Rs.500 per month in the savings account.It will grow over a period of time.If you want to get more interest,you can move half of the money to FD once you reach the target.You can always withdraw FD(At minimum interest loss) or take loan against FD if the need arise. Having an Emergency fund with you will always give you great confidence to face any financial challenges.
These are the matters which are more important than just doing the farming without understanding where you are heading.Keep a backup with you so that you will never fail/broken.Whatever be the condition,you should keep accumulating your Emergency fund.Because this is important than anything else.Also never withdraw the fund unless it is an emergency.Discipline is required if you want to lead a successful financial life.Do not use this money for your daily expense/farm related expenses.This is only for Emergency situation.
So with this New year,you start a new financial life by accumulating an Emergency Fund.There are many steps ahead for successful financial life. Emergency fund is the first one.Wish you all a Very Happy New Year.
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