How big must your emergency fund be?
Jul 02, 12:07

To tide over financial emergencies such as job loss, pay cuts and medical costs not covered by insurance, you need to have an emergency fund in place. It should be large enough to cover your expenses for six to twelve months: the larger the sum, the better. While accounting for expenses, do factor in liabilities such as loan repayments. Keep emergency funds in bank deposits and low-risk liquid funds. Don't invest your contingency fund in risky assets such as stocks. Financial planning starts with the creation of an emergency fund. Start with a recurring deposit to build it over a period of time. Review your emergency fund size at regular intervals.

Deciding the size