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Planning guide

Emergency fund: how big and where to keep it?

An emergency fund is the money that stops a job loss or medical bill from becoming a debt spiral. It is the first thing to build — before investing — because it lets every other plan survive a bad month.

How big?

Save 3–6 months of your essential monthly expenses (rent, EMIs, food, bills, insurance). Stretch it to 6–12 months if your income is irregular, you are self-employed, or you are the only earner.

If your essentials are ₹50,000 a month, aim for ₹1.5–3 lakh.

Where to keep it

OptionAccessReturn
Savings accountInstant~2.5–3.5%
Sweep-in FDSame day~6–7%
Liquid mutual fund1 working day~6–7%
Equity / stocksRisky ✗Volatile ✗

A good split: one month in your savings account for instant needs, the rest in a sweep-in FD or liquid fund earning more while staying accessible.

How to build it

Open a recurring deposit or set a monthly auto-transfer until you reach the target. Saving ₹10,000 a month builds a ₹1.5 lakh cushion in about 15 months — automate it and forget it.

Build your fund

Plan the monthly saving to hit your target.

RD Calculator →FD Calculator →

Frequently asked

How many months of expenses should I save?
A common rule is 3–6 months of essential expenses. Keep it closer to 6–12 months if your income is irregular, you are self-employed, or you are the sole earner for your family.
Should I invest my emergency fund in stocks?
No. The whole point is safety and instant access — a market crash often coincides with job losses. Keep it in a savings account, sweep-in FD or a liquid fund, not equity.
How do I build one without feeling the pinch?
Start a recurring deposit or a monthly transfer for a fixed amount until you hit your target. Automating it makes the habit painless.

Illustrative figures; returns vary. Estimates for planning, not financial advice.