Jun 3, 2025
A contingency fund is a financial safety net set aside for emergencies like job loss, illness, or sudden expenses. It's a key part of a secure financial plan.
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A contingency fund helps you stay financially afloat during unexpected events, without dipping into long-term investments or taking loans.
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Aim for at least 3 to 6 months of essential expenses. Freelancers or business owners may need to save up to 12 months’ worth.
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Keep it in low-risk, easily accessible places—like a savings account, fixed deposit, or liquid mutual fund.
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Start small, even Rs 1,000 a month. Set up auto-debits to a separate account and increase the amount gradually as income rises.
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Don’t use your emergency fund for travel, gadgets, or investments. Also, don’t forget to replenish it after using it.(Text : ET Wealth edition May 26, 2025 - Jun 1, 2025)
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