Why an emergency fund matters

An emergency fund is money kept aside for situations you didn’t plan for. Not vacations. Not shopping. It will only be used for real emergencies that need money immediately.

Think of it like this:

Your laptop suddenly stops working a week before exams. Or there’s a medical expense at home. Or an unexpected travel comes up. These moments don’t wait for you to save and then use.

That’s what an emergency fund is for.

How much should an emergency fund be?

A simple rule people follow is 3-6 months of basic expenses.

If someone spends ₹25,000 a month on essentials like rent, food, transport, and bills, an emergency fund would be around ₹75,000 (for 3 months) to ₹1,50,000 (for 6 months). This gives them time to handle a problem without stress or borrowing.

For teens, this can be much smaller. Even saving ₹200 to ₹500 a month from allowance or gifts builds a habit and a safety net.

Why is it so important?

Without an emergency fund, people often:

• Borrow money in a hurry even with high interest payments in the future

• Use money they had saved for important goals, like education or long-term investments

  
  

An emergency fund prevents all of that. It gives you time and choices when something unexpected happens.

Where should this money be kept?

Emergency money should be easy to access and safe. That’s why it’s usually kept in a savings account since the goal isn't to grow money fast but for accessibility.