In these uncertain times, saving for a rainy day makes complete sense for both men and women. Emergencies come unannounced and we should be prepared to take the blow. Women need to be extra cautious while planning their personal finance, including creating an emergency fund to keep them worry-free in dealing with contingencies. Often, women depend on the man of the house to manage their finances. But should change. With divorces and job losses becoming a common feature in today’s society, women should be proactively involved in managing the home’s finances and in creating an emergency fund.
Take Control Of Your Finances
Whether you are married or single, you must have an emergency fund. If you are single, an emergency fund helps you bail out in tough times. In worse cases where you become single due to the untimely demise of your spouse, you should have an emergency fund to sail through situations till the insurance payments and other necessary transfers take place in your name. A married woman needs an emergency fund to deal with contingencies like job loss, divorce etc. Emergency funds can also come handy when your salary is delayed and you have to meet your investment commitments.
While building an emergency fund, one should remember that it should not be the sum-total of your savings and investments, but a fund that makes you feel safe during that emergency period, assuming it would last no longer than six to 12 months.
Factors To Keep In Mind To Create This Corpus
- You should work on a fund that can take care of your finances for a few months. In case you are a salaried individual, it should be good enough to meet your 6-12 months’ salary. You can increase this fund’s size based on your money requirements, lifestyle, and the number of your dependents.
- While creating this fund, do remember, the money should be readily available to you. So put some money in Savings Bank Accounts, Fixed Deposits, Recurring Deposits, or liquid Mutual Funds. (More on these options, below.)
- You should also factor in inflation while building contingency fund and increase it periodically with each passing year, annual increment, or promotion.
Options Where Women Can Park Their Emergency Funds
Savings Bank Account: Its accessibility and easy operation make Savings Bank Account a preferred option to save money. It normally comes with an interest rate of 4-6 percent and money can be accessed through Debit Cards from any of the ATMs. Do check the withdrawal limit with your bank.
Recurring/Fixed Deposits: You can also open a Fixed or Recurring Deposit with your Savings Bank Account. Like Savings Bank Account, this is also a popular avenue to store your cash and easy to operate. This enables you to invest a specific amount every month (or periodically) that earns a higher interest rate than a Savings Account. The money can be easily withdrawn during an emergency.
Liquid Mutual Funds: These are debt Mutual Funds with securities whose tenure is no more than 91 days. These come with no lock-in period or exit loads and can be redeemed in less than 24 hours. Since they are mainly invested in fixed income securities with short maturity period, they have the lowest interest rate risk as compared to other debt funds.
Simple yet prudent acts like creating an emergency fund can give you financial freedom and empower you to deal with any eventuality.
Source by:- bankbazaar