It’s recommended that one should keep a minimum of 4 months of their salary as an emergency corpus. If you have dependents (like family), then 6 months or more of your salary is a must. Since this can’t be built overnight, you need to start investing NOW and gradually reach the final amount. Having an emergency corpus is a basic financial need for all. You can cut down on your other investments in order to first set crisis-proof your future.
Keep the following facts in mind when deciding on the actual amount for your emergency corpus.
- The size of your emergency corpus depends on how secure your job is and how many dependents you have.
- You will need to consider the EMIs and insurance premiums that you have to pay regularly.
- Households with huge EMIs will most likely experience higher financial stress when the income reduces. Their emergency corpus has to be much bigger to cope with the needs.