Meaning of emergency of fund for women
Imagine yourself stuck in financial crisis and you don’t have enough savings with you. That’s where the role of emergency funds becomes crucial. An emergency fund for women is a buffer to absorb the difficulties which she might have to face in such challenging times.
Why emergency fund is must for women?
As the time has changed so much societal developments has been experienced in the present scenario. The number of working women, female entrepreneurs, solo travelers’, single mothers, successful businessmen are increasing in developed and even in developing countries, But the importance of an emergency fund is still present as one can’t predict future. As the investment done in various securities, banks, mutual funds, SIPs all required some amount of time to mature and they are not that much easily converted into liquid cash.
4 Usages of Emergency Funds for Women
1. Medical Emergency
The pandemic has depicted the kind of risks which are associated with medical emergency in the family. especially if the male member is the only bread winner for the family.
2. Education for the children
A sudden demise of the husband or any fatal accident which can affect the earning capacity, can seriously affect future education, because the fees are sky rocketing now days. An emergency fund created by you can be the foundation for the future career for your children.
3. Home repairs
An emergency fund becomes handy in case of any property risks caused to your house due to any natural calamity or any major modifications required in your house, remember individual generally do not buy home insurance or fire insurance. In such events emergency funds will surely take toll upon it.
4. Job loss
The present situation where technology is growing at a very fast pace, AI is replacing worker which is causing retrenchments in various sectors such as manufacturing, education, banking, medical etc. In such situation the role of emergency funds becomes vital if you land in such an unpleasant situation.
How to set up an emergency fund ?
As you are aware of the different avenues where an emergency fund can be useful for you,now we have to ponder how to set up one.
5 Steps to set up an emergency fund for Women
Step 1 Location of an emergency fund
There are several places where you can create your emergency funds such as:
Traditional Saving Account deliver easy access and nominal interest to the withdrawal functions in case of an emergency. The traditional saving account offers a risk-free interest to the account holders.
Money Market comes with attractive interest rates but the returns are linked to market risks it offers debit capabilities while sometimes requiring larger account minimums.
It totally depends upon the amount of emergency funds; how financially stable you are and where do you prefer to create your funds.
Step 2 Fix an amount for emergency fund
Every women should ponder upon the question How much money she will be requiring on a wee day. The goal will be different from person to person and family to family. Therefore, followings points should be given importance:
Begin with a small savings. If you target to make a corpus of 1,00,000,000 USD then you have to begin with a small and regular savings from your budget.
Plan for 3 months’ family expense. All of the financial gurus advises that a minimal amount which is required to satisfy your family needs must be kept aside as emergency fund.
Next target convert your 3 months fund to 6 month emergency fund. Imagine a situation where you can enjoy mental freedom from financial requirements of your family.``````
Fix a percentage of your monthly paycheck. Increase your pace of growing emergency funds by making a simple promise to yourself that 5% or 10% of my salary will go the fund.
Step 3 Grow your emergency fund
After taking the step for creating an emergency funds, keep pushing yourself. Apply some of the below given handy tips for creating your emergency saving, your personal financial situation will improve.
Enable a Auto debit in your saving account. A specific amount which can be automatically debited and linked to your emergency fund will surely be handful every month.
Park your any unexpected income to the emergency funds. Any prize money,capital gains or arrears of your paycheck can surely boost your emergency funds effectively.
Take rest and let your money work for you. Link your emergency funds created in money market grow automatically,while you take rest.
Track your saving goals.Keep an eye on your savings and ensure it is easily accessible and growing towards your milestones.
Final thoughts
An emergency fund can provide you a peace of mind against the unpredictable future financial requirements. In such a way you will be always ready for a dual with unseen requirements,you'll be equipped with easy disposable cash in place of a loan, Building an emergency fund also gives you a practice session for saving for financial goals and create healthy money habits.
Go plan a meeting with a banker if you need help in determining the amount of your emergency fund. The banker will take consideration of all the pure risks such as property risk,liability risk,life risk etc and will help you to fix how much you should save.
FAQs
How important is an Emergency Fund for Women?
Very important. An emergency fund provides financial security in unexpected situations, ensuring independence.
Can't I rely on insurance?
Insurance may not cover all immediate expenses, so an emergency fund complements it.
How much should I save?
Aim for at least three to six months of living expenses.
Can't I rely on friends or family?
It's best to have an emergency fund to avoid straining relationships.
Why a separate fund for women?
A dedicated fund addresses gender-specific emergencies, promoting financial security and autonomy.
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