In the uncertain world an emergency saving fund is essential to set up. It eliminates all financial uncertainty for short term 3 to 6 month.
An emergency saving fund is prerequisite for safeguarding yourselves and family from any mishaps. Future is uncertain , so it is essential to set-up an emergency fund ranging from 3 month to 6 months.
If you have a question about how much money you need to get-started an emergency funds, you can start it from your paycheck.
There are some steps can be followed before investing.
You need a bank account, monthly fixed incomes and a strong desire of saving and contribution from monthly income.
Step 1 – First of all you need to calculate home take salary. This is calculated from paycheck minus federal income tax, which is essential to pay.
Step 2 – Now calculate home take salary for 12 month. So that you can understand how much money is required to contribute to emergency corpus.
Step 3 – Make a monthly budget and corpus amount you would like to set-up. This is your desire how much to contribute and how-much to save for any uncertainty.
Step 4 – When everything is decided, now you have to check where to deposit this amount. My first recommendation is bank saving account which is more secure and safe. Mutual fund and stock market is a good option but not safe in volatility, either you can choose a lender who pay you monthly or as you desire.
Step 5 – Set up and automatic withdraw from paycheck. This will make you burden free in an emergency. And never stop setting up an emergency corpus, as the income rise, rise an amount for this fund.
As I suggest you to calculate 12 month salary, if you want to set-up an emergency fund for $10000 then you need to deposit amount around $800 monthly.
Set-up and emergency fund read more