Importance of Maintaining an Emergency Fund

The coronavirus crisis has shown us the importance of having an emergency fund set up as it comes in handy whenever any unexpected crisis arises. The lockdown measures which were announced by many governments globally had forced many people to stay out of work for many days.

These testing times have indeed shown us that there is a need to set up an emergency fund to overcome a situation like a health emergency or a job loss or an accident and so on which will lead to loss of income.

If one has an adequate emergency fund in place, then the trauma of going through the financial struggle can be avoided. Before starting the financial journey, one needs to address basic protection needs. This can be done by picking up an adequate insurance plan and also by building an emergency corpus.

Most of the financial advisors do suggest their clients keep aside a sum of money at least 6 - 12 months monthly salary in liquid position. If you have a loan then do take the EMI amount also into consideration before setting up an emergency corpus.

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