Emergency Fund Rule: How much should an employee or business owner have as an emergency fund? Learn the correct rules and avoid any problems.
Anyone, whether employed or in business, may suddenly need money. Let's find out how much an emergency fund should have, based on their work culture and needs...
Emergency Fund Rule India: Anyone, whether employed or in business, may suddenly need money. Investing habits help you meet these needs. However, financial experts advise everyone to create an emergency fund based on their needs. The risk of job loss and business fluctuations always looms.
Income stops, but expenses continue, so your emergency fund proves to be a very helpful companion. Let's find out how much an emergency fund should have, based on your work culture and needs...
Keep these things in mind before creating an emergency fund
The amount of emergency fund is not the same for everyone. It depends on your income. How stable is your job or business and how many people in your family are you responsible for?
Having a very small emergency fund can lead to difficulties in difficult times. Therefore, an emergency fund should be created with these factors in mind.
3 and 6 Month Emergency Fund
An emergency fund equivalent to 3 months' expenses should be created for those who are unmarried and who are not burdened with debt or EMIs. Such individuals can create a 3-month emergency fund. This fund can easily meet almost all their needs.
On the other hand, for those who live with family, more security is needed. In such situations, it is considered better to have an emergency fund equivalent to approximately 6 months' expenses to cover responsibilities such as rent or EMI, rations, utility bills, school fees, insurance, and medical needs.
12 Month Emergency Fund
If you are not employed and your business is not stable, you should create an emergency fund of at least 9 to 12 months. Because your family is completely dependent on you and if your income is not fixed, then without an emergency fund you may get into trouble.
