Question 1

What is an emergency fund?

Accepted Answer

Money set aside exclusively for genuine surprises - a job loss, a medical bill, an urgent repair. It is a safety net, not an investment: its job is to be there instantly, so the rest of your financial plan survives a bad month.

Question 2

How large should my emergency fund be?

Accepted Answer

Three to six months of essential expenses is the standard range. Choose three months if your income is stable and your household has a second earner; choose six if your income is variable or one salary carries everything. Size it on what you spend, not what you earn.

Question 3

How does this planner work?

Accepted Answer

Add up your monthly essentials - rent, utilities, food, travel, EMIs and other commitments - choose how many months to cover and how quickly you want the fund built, and it computes the exact monthly SIP that gets you there, accounting for the interest your deposits earn along the way.

Question 4

How is the monthly SIP calculated?

Accepted Answer

As an example: ₹37,000 of monthly expenses covered for 3 months means a ₹1,11,000 target. Building that in 6 months at a 6% annual rate needs about ₹18,180 per month - slightly less than a sixth of the target, because each deposit earns interest until the deadline.

Question 5

Where should I park the fund?

Accepted Answer

Somewhere safe, boring, and instantly accessible: a liquid fund, a sweep-in fixed deposit, or a high-yield savings account. The 4.5-8.5% rate range in this planner reflects what such instruments realistically pay.

Question 6

Why not invest the emergency fund for higher returns?

Accepted Answer

Because emergencies do not wait for markets to recover. Equity can be down 30% in exactly the month you need the money. The fund's return is measured in availability, not percentage - growth is what the rest of your portfolio is for.

Emergency Fund Planner

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