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Emergency Funds

# Little Savings

My cousin have been working for an IT company and recently they terminated him from the job. He is a bachelor now and his least expenses for a month varies from 6-7K and have a credit loan of 12K per month. Imagine from his place now, "how can I pay 20K per month without a job?"

IT sector is a volatile job. We are not sure when we lose the job, even if you are over paid, you are the first one to terminate by the company and also if you are not good enough to work, you are the one first they fire. At the last, the only question arise in one's mind that, "how to manage your expenses without a job?"


For how long?

After you lost the job, the tentative period to get another new one depends on so many factors like, your stream of work, present job market etc., The experts say that keeping a 3-6 months of emergency funds will be handy.

How much?

It varies to each individual. List out your expenses per month. Lets take a general example.
For Rent, you need to keep aside 8,000 - 10,000 rupees
if any loan, 9000 - 12000 rupees
hand money, 3000 - 7000 rupees
* This has taken count from a single to a married person.

So, the total sum upto 20K to 30K per month.

Total Emergency Funds?
So, we need 20K - 30K for 5 months(I presume) i.e., equal to 1 lakh to 1.8 lakhs.


How to save for Emergency Funds?

It is not easy to save this huge amount in a single day. But it is possible, if you save the little amounts monthly. You need to set aside atleast 5K to 10K per month.


Where to save the funds?

a. Fixed Deposit is one of the best option as the funds should not be locked in any investments and should be readily available in liquid cash.
b. Saving in liquid mutual funds is the second option. There are so many apps where you can save your liquid funds without opening a Demat account. Eg ET Money app, Freerecharge.
c. Have a liquid money in your spouse/parents bank account.
d. Gold Savings Deposits/Gold Equity Funds) - This is the last option. 

I don't see much returns in the Gold Investments Schemes/Gold Equity Funds(which resells in lesser value), but this will help us to liquidate the investments whenever we need. Eg. Paytm gold schemes, Phone Pe, ET Money etc.,


When to start collecting your emergency funds?

There is no best time to start, it is always a good start if you save early. But by the time, you get married and have kids, one should be ready with the Emergency Funds.