Life throws\na curveball when you least expect it. Of late, you all have understood the\nimportance of having an emergency cushion to get by during financial hardships.\nUnprecedented levels of the soaring cost of living pushed millions of people on\nthe verge of a never-ending cycle of debt. <\/p>\n\n\n\n
Unexpected\nexpenses can crop up at any time. For all an impressive amount of savings, you\nwould be hard-pressed to tide over when you are caught unawares by unforeseen\nexpenses. Experts suggest that you put in some money whether you are living\npaycheque to paycheque or you have a sound financial condition. <\/p>\n\n\n\n
Now the\nquestion is what an ideal emergency cushion looks like or what should be the\nsize of an ideal emergency corpus. <\/p>\n\n\n\n
What is an emergency cushion?<\/strong><\/p>\n\n\n\n An\nemergency cushion is a sum of money that you set aside and dip into only when\nunforeseen expenses pop up. In other words, these savings are also called a\nrainy-day fund. The following are the expenses that come under the category of\nunforeseen:<\/p>\n\n\n\n The idea behind building an emergency cushion is to make money accessible when you out of nowhere need it. This will prevent you from taking out a loan. Suppose you lose your job, and, luckily, you have an emergency corpus. Until you land a new job, you can dip into it instead of taking out a <\/strong>payday <\/strong><\/a>loan <\/a><\/strong>for the unemployed<\/strong><\/a>. <\/p>\n\n\n\n A rainy-day\nfund can help ease off the additional pressure of expenses on your budget when\nyou are already in a tight spot.<\/p>\n\n\n\n How much money should you stow away?<\/strong><\/p>\n\n\n\n You should\naim to save three to nine months\u2019 worth of living expenses. You must have a\nvery good income to be able to stash away six to nine months\u2019 worth of living\ncosts. Experts suggest saving three-month worth of household expenses as it\nwill help cover your daily expenses when you are out of work.<\/p>\n\n\n\n You might\ntake a month or two to land a new job. These savings will come in handy then.\nBut people living paycheque to paycheque will not be able to save this much\nmoney for a rainy day. As a result, it will be all but impossible to be able to\nset aside money for three months\u2019 worth of living costs. <\/p>\n\n\n\n The size of\nyour emergency savings depends on your financial circumstances. You may or may\nnot be able to save this small amount of money. Well, it does not matter how\nmuch your monthly income allows you to lay aside. The question is if you stick\nto your contribution. <\/p>\n\n\n\n Most of the\npeople fail to build savings for a rainy day as they do not stick to the\nsavings plan. Experts say that you pay yourself first. Choose a fixed sum of\nmoney that your budget allows and then set it aside as soon as you receive your\npaycheque.<\/p>\n\n\n\n An\nemergency cushion will be more significant when you are retired. As you will be\nliving off your pension, you will need savings that cover expenses worth a year\nor two. During the golden years of your life, your expenses may go up. For\ninstance, your medical expenses might be high. <\/p>\n\n\n\n It will be\nhard to cover unexpected expenses from your pension so you will need larger\nsavings. It is always suggested that you generate a fixed source of income in\nthe golden years of your life. You should have an additional supply of income\nto be able to cover all of your expenses, including unforeseen ones.<\/p>\n\n\n\n Tips for building an emergency cushion<\/strong><\/p>\n\n\n\n Now that\nyou know what should be the size of an ideal emergency cushion. The next step\nis to know the ways to create the one. <\/p>\n\n\n\n\n