What if your income stopped?
How big should your emergency fund be?
- Months to keep aside, from your bills
- How long your savings last today
- When your fund will be full
- Saved₹1 L25%
- Still to save₹3 L75%
How long your savings last
- 6 Private-sector salary
- +2 Only income for 1 person
Your inputs
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What this means
- Don't count stocks, equity funds, PF or gold. They can be down, or locked, the month you need them.
Why?
An emergency fund's job is to be there in full within a day. Returns come second.
- ₹10,000 of EMIs is 20% of each month's need. Loans don't pause when pay does.
Why?
A missed EMI hurts your credit score for years. Clearing a small loan can shrink the fund you need.
- Refill it after you use it, and raise the target when your expenses grow.
Why?
Check it every year, or when you move house, have a child or take a loan.
More details
When your fund is full
₹15,000 a month, earning about 6% a year in a sweep FD or liquid fund.
Where to keep it
- Savings account₹50,000
- Sweep-in FD₹1 L
- Liquid mutual fund₹2.5 L
- Savings account₹50,000Instant, UPI and ATMabout 3% a year
- Sweep-in FD₹1 LInstant, breaks as neededabout 6.5% a year
- Liquid mutual fund₹2.5 LNext working dayabout 6.8% a year
Earns about ₹25,000 a year before tax, against ₹12,000 in a savings account alone.
Tax on the interest, a year
- Savings account ₹1,500 interest₹468 tax · you keep ₹1,032
- Sweep-in FD ₹6,500 interest₹2,028 tax · you keep ₹4,472
- Liquid mutual fund ₹17,000 interest₹5,304 tax · you keep ₹11,696
Interest is taxed at your 30% slab plus 4% cess each year. After tax the fund earns ₹17,200 a year.
How it's calculated
- One month: your essential expenses plus loan EMIs, the spending that carries on if your income stops.
- Months to keep: 3 for a government or PSU job, 6 for a private-sector salary and 9 for freelance, business or commission income. Add 2 if yours is the only income for people who depend on you, take away one if there's a second earner, and add 2 without health insurance of your own. Never below 3 or above 12.
- When it's full: what you've saved plus your monthly amount, growing at about 6% a year.
- Where to keep it: one month in a savings account, two in a sweep-in FD and the rest in a liquid fund. Rates are typical, before tax.
These are rules of thumb. Keep more if your job is at risk, a big expense is coming, or someone at home has a health condition.
Tax on the interest. Savings-account, sweep-in FD and liquid-fund interest is added to your income and taxed at your slab plus 4% cess. Interest after tax = interest × (1 − slab × 1.04). The ₹10,000 savings-interest deduction (80TTA, old regime) is not counted.