A lot of startups follow this principle of “Hire slow and Fire Fast.” Pink slips are flying thick and fast at startups and internet-based companies across the country.
Recently, Flipkart was in news but for a different reason.
Flipkart is showing the door to around 700 employees. Previously, Snapdeal, Zomato, Grofers, Housing, TinyOwl and a host of others had laid off staff.
This is when Emergency fund comes to rescue. As the name suggests, it should only be touched in case of real emergency and something which requires some sort of immediate action.
The concept of Emergency fund is not new. Our ancestors have been doing it for quite long. I have seen my Nani, save out of the money she got for household expense, a certain amount every month for bad times and that money always was a respite in the times of need. An emergency fund is designed to cover a financial shortfall when an unexpected expense crops up.
Following points should be kept in mind while building emergency fund:
- It should be liquid and easy to access.
- It should hold at least six months of salary to cover up expenses.
- Set up a liquid mutual fund or savings account
- Set up initial target low and start by saving small amounts and once it is achieved,then reach another milestone.
- Before using the emergency fund, ask yourself if it is the real emergency or the temptation.
- Don’t use emergency fund on Splurges, instead have a separate “Splurge Fund”.
By just following these points, you’ll be well on your way to being prepared for any situation that results in an unexpected financial loss.
Before you know it, your life won’t be disrupted by these kinds of emergencies – and you’ll sleep a lot better at night knowing that 🙂
About the Author: Gurleen Kaur is a Financial Consultant and devotes her time to her company www.hareepatti.com. She has done her Bachelors in Finance and Investment Analysis(BFIA) from College of Business Studies(CBS, Delhi) and MBA from IMT, Ghaziabad. She can be Contacted at firstname.lastname@example.org