Everything You Need To Know about Emergency Funds

A Thread 🧵👇

1/ Let’s understand the meaning of Emergency Fund, it is a fund that will help you at the time of financial crisis or unplanned scenarios. It is also known as contingency funds.

An Emergency Fund is the first step towards financial freedom.
2/ For example, when the Covid-19 hits many people lose their jobs which results in loss of financial support and people find difficulties buying basic necessities for themselves. So, having emergency funds helps you to sustain the period.
3/ Now the question arises, how to build an Emergency Fund?

An emergency fund cannot be built overnight but it can be done gradually. Firstly, you need to analyse your monthly expenses and then, you need to set aside a particular amount every month.
4/ Say, you have decided to have an emergency fund of ₹3 lakhs. In this case, you can set aside ₹45000 or ₹50000 every month to accumulate the corpus you need. It is fine to even cut down on your investments to build this amount.
5/ How much Emergency Fund is required?

Well, it depends upon your monthly income and expenses, ideally an emergency fund should be at least 6 months of your monthly expenses.
6/ For example, your monthly income is ₹1 lakh and your expenditure are ₹50000, then you should have ₹3-3.5 lakhs of emergency fund.
7/ Lastly, the question arises where to park the emergency fund?

It is the most important criteria of building an emergency fund because managing your money is a very crucial part.

Once you have built your emergency fund, it should be diversified into different channels.
8/ (a) Some portion of your money should be kept in cash because liquidity is very important.

(b) Some portion should be kept in your savings bank account.

(c) A part of your money should be invested in the liquid fund, where your goal is not to chase returns.
9/ If you’re wondering how much percentage of money should be invested in different options, well it depends upon the individual choice.
10/ Unpopular Fact - Don’t invest your emergency funds in the stock market or mutual funds.

BY : @ShubhamAggarwl
11/ That’s it, hope you liked the thread.

We have compiled a complete guide on Basics of Stock Market where you can learn most complex topics in the simplified manner and even a non-finance background person can learn.

Checkout → https://t.co/hgdS0e0FfS…

More from Finance

1/ My Mission: To Spread Financial Wellness (thread)

Here’s what "financial wellness" means to me

⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️⬇️

2/ Mindset

Humans are programmed to think short-term

Evolutionary, thinking short-term makes sense. It helps with survival.

Financial wellness is all about training yourself to develop a long-term mindset

Not easy -- it takes practice


3/ Mindset

If you join the right tribes, you can’t help but improve

My favs:
@AffordAnything
@ChooseFiFI
FinTwit
@MicroCapClub
@themotleyfoolFool
@visualizevalue

Twitter / Podcasts / Blogs / YouTube -- when used correctly -- are amazing


4/ Mindset

Educate yourself - constantly!

Especially about:

1⃣Money
2⃣Relationships
3⃣Health

These 3 categories have an outsized influence on all areas of your life

Books


5/ Career

In the beginning, focus on growing your income

Do more than what is expected

Become a lynchpin

Find a career that you ENJOY (<- important!) that also has high-income potential

Start a side hustle (<- important!)

Build your talent

You May Also Like

Department List of UCAS-China PROFESSORs for ANSO, CSC and UCAS (fully or partial) Scholarship Acceptance
1) UCAS School of physical sciences Professor
https://t.co/9X8OheIvRw
2) UCAS School of mathematical sciences Professor

3) UCAS School of nuclear sciences and technology
https://t.co/nQH8JnewcJ
4) UCAS School of astronomy and space sciences
https://t.co/7Ikc6CuKHZ
5) UCAS School of engineering

6) Geotechnical Engineering Teaching and Research Office
https://t.co/jBCJW7UKlQ
7) Multi-scale Mechanics Teaching and Research Section
https://t.co/eqfQnX1LEQ
😎 Microgravity Science Teaching and Research

9) High temperature gas dynamics teaching and research section
https://t.co/tVIdKgTPl3
10) Department of Biomechanics and Medical Engineering
https://t.co/ubW4xhZY2R
11) Ocean Engineering Teaching and Research

12) Department of Dynamics and Advanced Manufacturing
https://t.co/42BKXEugGv
13) Refrigeration and Cryogenic Engineering Teaching and Research Office
https://t.co/pZdUXFTvw3
14) Power Machinery and Engineering Teaching and Research