Life can be full of uncertainties. One minute you have a steady job and income, and the next you could be fighting to make ends meet. This is why it is critical to have a safety pool of funds that can be used when an emergency strikes. Emergency funds provide you with this security in times of unexpected circumstances. The importance of an emergency fund cannot be stated enough.
Here are a few things to know in this regard.
Why should you have an emergency fund?
An emergency fund is a vital component of your financial plan. Storing some money specifically for a contingency can ensure that you do not spend your long term savings or end up in debt over short term expenses. Losing a job or coming face to face with a medical emergency can force you to dig into your savings pool. You may even be compelled to take on a loan or rely on your credit card. All of this can be avoided with an emergency fund in place. Having an emergency fund offers you with increased liquidity and acts as a cushion to fall back on.
How to build an emergency fund?
There are various ways to build an emergency fund. You can follow the steps given below to craft a foolproof emergency fund:
Wealth creation plans by ICICI Prudential Life
ICICI Prudential Life offers many plans that have the potential to maximise your investments along with providing you with the safety of a life cover that can protect your family in the case of an emergency. The ICICI Pru Lifetime Classic Plan1 is a Unit Linked Life Individual Product that gives the dual benefit of investment and financial protection through a life cover. It allows you to invest your money in a combination of debt, equity, and balanced funds. You can choose between four portfolio strategies6 as per your preference and make four fund switches in a year for free. In addition to this, loyalty additions3 and wealth boosters4 get added to your investment, thereby increasing your overall returns. The plan allows you to choose flexible premium payment modes among single pay, monthly, semi-annually, and annually. The plan also offers tax5 benefits under Section 80C5 of Income Tax Act, 1961.
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