How to Start an Emergency Savings Fund?

emergency savings

An emergency comes looking for us when it is least expected. You may even have a bad stomach on the day of your marriage and it will turn the most memorable day of your life, into an unforgettable nightmare. An emergency is something that we think that we cannot ever prepare ourselves for, well in advance. It just comes crashing down on us like a bolt from the blue and life will never be the same again. An emergency can walk into our lives from any direction around us or it may stand in waiting at the corner of the crossroads for its turn to come and pounce on us. We cannot actually predict how it will surface and take our life by a storm.

Your aging father who had never complained about a chest pain may get an acute heart attack so severe in magnitude that he needs to be immediately rushed to the hospital. Your wife while delivering her first baby may be diagnosed with some major gynecological complications which could even prolong her stay in the hospital. On your way to your office, a loaded truck could smash into your brand new SUV wrecking the external body of it beyond repair. The list continues featuring endless possibilities of emergencies that could change the course of your life forever. A burglar may barge into your house and rob you. Your son may dislocate his shoulder while having an altercation followed by a brawl with his classmates in the school. You must have noticed a thread of commonality that stitches all these probable instances of emergency together and the commonalities lie in the fact that it requires money to support with a ready fund to come to terms with these emergency situations. Although you cannot take precautions to protect yourself from falling prey to these emergencies, you can in fact plan for how to create an emergency fund that you need to harness with an objective to use it at the mind of emergency.

Setting your priority Right

Raising a fund separately alongside the other fixed and recurring expense overheads is not easy. It takes rigorous planning and a strong determination to take the first meaningful step towards adapting yourselves to the habit of saving money for the unforeseen future and it does not happen over the night. It involves an act of prioritizing your expenses and putting them in the sequence of descending order of importance so as to decide how much importance to be assigned to which expense.

Paying the monthly electricity bill or the house rent cannot ever be equated or given the same degree of priority with the act of buying tickets for an upcoming Hollywood blockbuster. Going to the nearby supermarket to buy cereals and staples for the whole month cannot be put on the same parallel of importance with the proclivity to dine out with the friends in an exotic themed restaurant. Therefore, if you keep staring at the trajectory of your overhead of expenses through the lenses of a priority framework system, you will be able to figure out the areas where you can cut down on your expenses to save money in order to keep it aside and put it into the emergency fund. This could also help your startup business.

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In the beginning, you may find this exercise quite intimidating as you will eventually lose the liberty to spend money at your whims and wishes. But going forward, you may realize why it is something of utmost necessity and how it will help you in your pursuit to raise an emergency fund. It will be more like exercising self-restraint by adopting a more sensible and responsible approach towards realigning your expenses with an objective to fill in all the holes in the pockets through which money can slip into the sewage of wastage. We can surely multiply our income by not letting your hard-earned money go in vain or wasted on the heels of irrational expenditures which need to be avoided or curtailed.

Borrowing money could be detrimental to our self-respect

Gone are the days when we used to borrow money from friends and families at the time of the emergency. But it is as weird as placing an order online for a running shoe to start working out every day in the morning on the day of your open-heart surgery. It never works out and often incites others to laugh at your macabre thoughts. Moreover, we all are living in an age of shrinking family sizes and parting ways with friends. We are forced in some way or the other to live life in utter isolation being unable to take time out for our near and dear ones. We may not remember when we had a family reunion or a get-together session with friends for the last time. Therefore, we often get confused to decide whom to seek monetary help from and how to grapple with the embarrassment of being refused right on the face.

Hence, we need to plan well with how to define a balanced portfolio of investment whereby we will put money into different saving and investment options to yield maximum return on our investments. Let’s try to chart out some of the common and very popular savings options that have to be accommodated in the portfolio.

Savings A/C in a scheduled bank

It is considered to be a baby step, to begin within the paradigm of investment. Instead of putting all your money stuffed inside your pocket and get it buried beneath the mattress of the bed, one needs to start with cultivating a habit of depositing money in the bank as it pays back returns, calculated at a certain percentage on the money left with the bank. However, it is pertinent to know that the rate of interest incurred from a savings A/C is not lucrative and it is fast diminishing further. Withdrawing money from a bank lies with the discretion of the A/C holder. You can withdraw money as and when required from the bank itself or even from the ATM counter with the instrument of your debit card.

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Fixed Deposit poses itself as a reliable investment option

You can pledge a certain sum of money for a specified period of time to a bank at a fixed rate of interest. Bank will issue a certificate of deposit against the money you have invested. You can even apply for a loan against the certificate of deposit or you can even withdraw the money before the completion of tenure of investment as notified in the time of issuing the certificate. But any premature withdrawal will cost you with a percentage of interest promised by the bank.

Apply for a loan online

The concept of online loans redefines the ease of loan being granted digitally. You don’t have to travel to a specific place, neither you have to submit any documents or testimonials. The only thing which is required to be done is to fill up a form furnishing all your income details and based on the assessment of your loan application in the light of the information provided by you, your eligibility for the loan will be declared along with the amount of loan you are entitled for. Once you agree with the T&C’s, the loan amount will be directly transferred to your A/C. This is probably the most convenient way to get a loan sanctioned, sitting in the comfort of your home. The most exciting feature it offers is a sense of liberty to choose how long you will prefer to take to repay the loan and with what percentage of interest.

As there are a plethora of options available for you to choose from. It often creates confusion, which eventually ends up with misleading an individual to a wrong investment decision. Therefore, it is always advisable to resort to professional help from the expert who will chalk out the framework of your investment portfolio on behalf of you based on the understanding of your personal needs and investment goals.

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