The Importance of an Emergency Fund in COVID19 Era-Part 1

Mayur Pirgal & Kanchan Dwivedi

Do you have an Emergency Fund today? If yes, we are happy for you. But, if your answer is no, then this article will be especially useful to you.

If there is anything that COVID19 onslaught has taught us, it is that life can take unexpected turns with serious implications for our life & business, without any warning. We have learnt that, we cannot predict when and how situations change for the worse. However, we can certainly plan for such an expected or unexpected unforeseen situation.

One of the ways, Millennials can effectively deal with such unplanned situations is by having an Emergency Fund.

We are covering the following in Part 1 of our Two- Part article:-

  1. What is an Emergency Fund?

  2. Why should you save for an Emergency Fund?

  3. How much money should you allocate for an Emergency Fund ?

Design Credit: Freepik.com

1. What is an Emergency Fund? An Emergency Fund is that sum of money, which is set aside to cover large and especially unforeseen expenses or situations like:-

  • Medical Emergency

  • Job Loss

  • Salary Loss

  • Pay Cut

  • Loss of Phone or Laptop

  • Home Appliance Repair or Purchase

  • Major Car or Motorcycle Repair

  • Thefts

  • Wars

  • Floods, Fires or Natural Calamities