Shrikant Bedekar
Member • Feb 5, 2014
Emergency Fund - [Finance For Engineers]
"Success consists of going from failure to failure without loss of enthusiasm." - Winston Churchill
We cover ourselves under various insurance policies such as life insurance, health insurance etc. but there may be several instances that may not be covered under insurance policies, such as loosing your job or an emergency trip that may have to be made or some necessary cash outflows that have to be made. So while you are assured that you have done all that is required to keep you insured and maintain a healthy lifestyle, you need to keep in place an emergency fund to meet uninsured emergencies. The amount of this fund can be decided by you according to what you feel would be sufficient in times like these. Although as a thumb rule it should be equal to six months of household expenses. The purpose of this fund is not to earn money and therefore should not be invested in instruments for earning money, but rather should be kept in an account where it is easily accessible if the need arises like a savings bank account. Hence always have an emergency fund.
We cover ourselves under various insurance policies such as life insurance, health insurance etc. but there may be several instances that may not be covered under insurance policies, such as loosing your job or an emergency trip that may have to be made or some necessary cash outflows that have to be made. So while you are assured that you have done all that is required to keep you insured and maintain a healthy lifestyle, you need to keep in place an emergency fund to meet uninsured emergencies. The amount of this fund can be decided by you according to what you feel would be sufficient in times like these. Although as a thumb rule it should be equal to six months of household expenses. The purpose of this fund is not to earn money and therefore should not be invested in instruments for earning money, but rather should be kept in an account where it is easily accessible if the need arises like a savings bank account. Hence always have an emergency fund.