Quarantine In India
India has never witnessed such situation and we AssuredGain have already emphasized the need of emergency fund during Financial Planning. Most Indians are worried given the complete lockdown in all parts of India. This is the right time to check your Financial Health.
First and foremost is the emergency fund. Emergency funds are the backbone of strong personal financial plans.
“Save one third, live on one-third, and give away one-third.”
– Angelina Jolie
What is an emergency fund?
Before we break down exactly what an emergency fund is, let’s define what it is not:
· It is not used for planned purchases like a house, a new car, a college education, and so on.
· It does not have to a large, unattainable amount; it can start small.
· It is not a set amount for everyone—it varies based on your lifestyle.
An emergency fund is money you set aside for when an emergency upends your world and you need money to do what needs to be done. While a person’s emergency fund will vary from situation to situation.
As per Narendar Kumar of AssuredGain Financial Planners chennai , a fully stocked emergency fund should hold between six to eight months of monthly expenses. Having an emergency fund gives you the peace of mind to know that should something truly awful happen, such as losing your job, you can worry about how to deal with the emergency itself and not worry about how you’re going to survive financially.
One must develop a plan to save for emergency. If you are the only breadwinner in your family, you must have to save a bigger sum of emergency funds. Because if you lose your job, there will be no income at all. So you will need it as there is no one to support you.
Emergency Fund during Quarantine:
AssuredGain suggest developing a passive income stream which gives continuous return during such emergency. Most professional in certain category have unstable jobs. They must have a larger emergency fund as the chances of losing your job is higher and you should be prepared. If you or your family has serious health issues then you should have a higher emergency fund as you may incur a lot of medical expenses. Proper medical insurance along with top-up medical insurance plan is must.
Financial health is known to be a great cause of stress. Now being Quarantine that you understand that an emergency fund is a necessary financial tool, you need to figure out what is and isn’t a financial emergency.
Financial emergencies are unexpected major expenses that require you to use money immediately. In order to be an emergency, these expenses must be related to preserving your financial future, your health or your assets.
Here are a few examples of true financial emergencies where it would make sense to use your emergency fund.
· Job loss
· Unexpected medical expenses to maintain your health (if not proper medical insurance taken)
· Sudden unexpected car breakdown or accident – Ensure your car has comprehensive cover.
· Sudden unexpected problem with a major system in an owned house such as an air conditioner, roof or electrical system or any such major expense.
· A family member passes away and you need to purchase last minute travel to the funeral or funeral expenses.
· A family member gets hurt and you need to take time off work to provide necessary care
Where to put your emergency fund:
AssuredGain suggests you save in bank account or cash in home. It often makes sense to keep your emergency fund at a bank separate from your main bank accounts.
That way you won’t be tempted to dip into your emergency fund for everyday expenses. Make sure you have easy access to if require
Ask an experienced financial planner for guidance in determining how to manage your funds – and for exploring your options to generate reliable income. They can help you build a rock-solid strategy that lets you enjoy a predictable lifestyle for the long haul.
If you are looking for answers from a financial professional, help is a click away at www.AssuredGain.com
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