This expense back-up should be the cash saved which will take care of our 3 to 6 months expenses. This is not the income of 3 to 6 months, it is the actual basic expense needed for 3 to 6 months to run the family and pay bills
Why is this emergency back-up needed ?. To understand this, let's take the reverse calculation. When we don't have the expense back-up in a liquid form, we will most likely get into debt when the unexpected situation arises like job loss. When we get into debt, we will only end up in paying the interest for years or months. When the interest payable is reduced, that is the starting point of the wealth generation process
Think, if you are in a heavy financial crisis and you don't have any income to pay bills and you are getting into debt. In this case, you will end up in getting more debt to pay even the interests the forecoming months. Even if you get the job after getting into debt, it will end up in paying the interests. If we have the expense back up for next 3 to 6 months. The fear is destroyed there and the time to get things fixed will be increased and we can take a wise decision
It is everyone's important need to have the emergency fund and the expense back-up in place as soon as we get into the job. This is the first step of getting into the wealth generation process. There are many bankers working round the clock to push you in debt. The main and important process which can help you fight this is emergency fund and expense back-up
You can ready more on the emergency fund creation in my other blog, link is as below:
Have a Great Day
B G Nareshkumar
No comments:
Post a Comment