Secure Your Emergency Fund With These Options
WeCredit_Team
“Saving for a rainy day” – Idiom
It’s a tough question, but one that matters deeply.
A recent survey found that 75% of Indians do not have an emergency fund. Most people realise its importance only when life takes a sudden turn—like a hospital bill, job loss, or home repair. Without savings to rely on, stress builds up fast.
Building and securing your emergency fund isn’t about luxury—it’s about survival. Whether you’re salaried, self-employed, or just starting out, having this fund is one of the first financial planning steps you should take.
In this blog, let’s explore how to build and protect your emergency fund the right way.
What Is an Emergency Fund and Why It Matters?
An emergency fund is your safety net. It’s the money you set aside for life’s unexpected turns—like a phone breaking down right before an important call, a family member falling sick, or your bike needing urgent repairs.
This fund isn’t meant for shopping, outings, or any planned spending. It’s for those tough moments that hit without warning. These moments can shake your peace of mind and break your monthly budget in a snap.
With an emergency fund in place, you stay calm even when life throws problems your way. It protects your financial health and gives you the power to say no to high-interest loans. You won’t need to borrow from friends or swipe your credit card in panic. That’s real money support, and it comes from your own planning.
How Much Should You Actually Save?
Here’s a rule: save at least 3 to 6 months of your monthly expenses.
If you’re a freelancer or run a small business, aim for 6 to 9 months. Your income doesn’t come on a fixed date, so your backup needs to hold longer.
Let’s say your monthly expenses come to Rs 25,000.
You should build an emergency fund between Rs 75,000 and Rs 1.5 lakh.
If you have dependants, school fees, or regular medical costs, push that number higher.
A common mistake? Saving too little or putting all the money in one place. When something goes wrong, there’s either not enough money or it’s stuck. And that’s when the fund doesn’t help at all.
Top 5 Ideal Places to Keep Your Emergency Fund
You don’t need to hide your savings under the mattress. Here are safe, smart, and practical places to keep your fund:
1. High-Interest Savings Account
It’s safe, easy to access, and earns a small return. Perfect for your first layer of emergency savings.
2. Fixed Deposits with Premature Withdrawal
FDs offer better interest than savings accounts. Pick ones that allow early withdrawal with minimal charges.
3. Liquid Mutual Funds
These are better than regular mutual funds for emergencies. You can withdraw in 24–48 hours. Returns are modest, but they beat inflation.
4. Sweep-In Fixed Deposits
A smart mix of savings and FD. Your extra money gets moved to an FD automatically and earns more—without locking your money.
5. Cash at Home (Minimal)
Keep a small amount at home. It helps during tech glitches, medical emergencies, or sudden travel.
Use a mix of these to stay ready without risking your money.
Where NOT to Keep Your Emergency Fund
Stock Market or Equity Mutual Funds – High risk. Markets can crash right when you need money.
Real Estate – Illiquid. You can’t sell property overnight.
Long-Term FDs without Premature Withdrawal – Money gets locked in. No quick access.
Digital Wallets or UPI Apps – Easy to spend, not meant for saving. Avoid temptation.
Your emergency fund is not an investment. It’s your lifeboat.
How to Split Your Emergency Fund Smartly?
Don’t put all your eggs in one basket. Use a 2-tier approach:
Tier 1: 50% in high-interest savings account + 10% cash at home
Tier 2: 30% in liquid funds + 10% in sweep-in FD
This mix gives you both safety and a small return. And you stay ready without stress.
Tips to Build and Maintain Your Emergency Fund
Automate It: Set auto-debit for Rs 500 or Rs 1,000 every month.
Start Small: Even Rs 5,000 can help during medical needs or travel issues.
Review It Annually: Expenses grow; so, should your fund.
Stay Disciplined: Don’t touch it for shopping or outings. This is for real emergencies only.
Final Thoughts: Safety Over Returns
It’s not about profit. It’s about peace of mind. An emergency fund gives you financial strength, confidence, and control. It protects your dreams from sudden shocks.
If you’re already planning your money smartly, this is the first step toward financial literacy. It prepares you for the next journey—an introduction to investment, home buying, or a business goal.
But before all that, your backup matters most.
And if you’re ever short on savings during a tough time, a small personal loan can act as temporary money support. Just make sure you repay it fast and use it only when truly needed.
Conclusion
At WeCredit, we help you take the right steps in your journey—whether it’s securing your emergency fund, preparing a budget, or applying for a personal loan when needed. Our aim is to make financial literacy and support available to everyone.
Stay ready. Stay strong. Secure your fund today.