Foresee the unforeseen & plan for the unplanned

Tarun BiraniTBNG CapitalThe rainy season is here. Bringing much awaited relief and excitement. And with it comes the joy of getting wet and enjoying endless cups of chai and pakodas. But one also needs to plan and be prepared to take on the rains - with an umbrella, windcheater and at times by staying indoors. Likewise, one needs to plan for situations in life that are beyond our control. Planning for the rainy day is also planning for contingencies that may arrive any time. Building an emergency fund and maintaining it from time to time goes a long way in living a successful financial life. Emergency fund prepare us for the unforeseen situations like unemployment, illness, accident or a major unplanned expense to meet any contingencies and protect our loved ones and ensure their well-being. • Peace of Mind The comfort of knowing that we have funds available to meet any emergency is soothing as it helps us to concentrate on our daily routine and make effective investments allied to our financial goals. If you are prepared for any contingencies by building adequate level of emergency funds, you can relax and focus on your core daily work more effectively. This goes a long way in ensuring peace of mind and brings great results in your day to day tasks. • Where to save itEmergency fund should be a top priority for everyone and the important thing to bear in mind is the immediate availability. The ease of liquidity is the foremost aspect one should look at while saving for emergency funds. Hence this money can either be in a savings bank account, saving bank account linked fixed deposits, recurring deposit or a short term debt mutual fund. In case we happen to use these funds for any emergency, we must ensure to rebuild them as early as possible. • Builds financial disciplineMaintaining an emergency fund builds financial discipline and help us to get on top of our personal cash flows. This habit goes a long way in helping an individual to meet his/her financial goals. Emergency funds also ensure that we draw our personal budget and more importantly try to follow it with discipline. Getting on top of your budget helps you to check unnecessary expenditure leading to better financial position. The habit of saving and maintaining adequate emergency fund is essential ingredient of a successful financial life. • The primary GoalEmergency fund is like a foundation to your financial plan. So everyone should treat this as a primary goal and start building on you financial plan. Emergency fund along with the right life and health insurance ensures wealth protection. Most of us are worried about how our investments are doing, what returns I am getting and tend to ignore this important area which may prove costly. Hence adequate level of emergency fund should be treated as a priority and should not be ignored by anyone. • How much to saveThe idea is to save minimum five to six times of your monthly expenses, which acts as your emergency fund. This ensures that you have your budget in place and also does not disturb your long term investments aligned to your financial goals like retirement, wealth creation etc. Emergency funds also act well to control our unnecessary expensesSo if you still haven’t planned for the rainy days, it is the best that you do so from today. Plan well and ensure you build adequate emergency fund. By doing so you can ensure that your loved ones are financially secured to face any challenging situation in life.