Emergency Fund
💡 In plain English: 3–6 months of living expenses kept in cash or liquid accounts — your financial shock absorber.
Definition
Readily accessible savings set aside to cover unexpected expenses or income loss, typically 3–6 months of essential living costs.
📌 Real-World Example
Monthly expenses ₹50,000 → Emergency fund target: ₹1.5L–₹3L. Keep it in a high-interest savings account or liquid mutual fund — NOT stocks or FDs with premature withdrawal penalties.
🔢 Formula
Related Terms
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