Let me tell you a short story.
Chiranjeevi is a software employee where he earns one lakh per month post taxes. He loves spending on food, entertainment, vacations, gadgets, and he thinks life is meant to enjoy. Saving is an unknown word for him.
One day while he is busy in a client meeting he got a call saying there is a major accident in his family. Once, after reaching the hospital and having a word with the doctor, he came to know they need to go for surgery which cost 10 lakh. Opened his saving account and was depressed by seeing 5 thousand in it.
What is he going to do??
Option 1: Call a friend to borrow money (No one will be ready to send 10 lakh).
Option 2: Go for a personal loan or gold loan
Option 3: Pay the medical bill using a credit card.
As he is having a huge credit limit and he paid the bill using his credit card. The surgery went well and the patient got discharged and everyone is happy.
It’s a weekend and they are watching the newly released movie on the OTT platform in their home theatre. Suddenly he got a notification on his brand new iPhone which got released last week and the notification is about his credit card bill statement.
Amount Due: 1257000/-
Min Amount Due: 62850/-
Then he started thinking about how to pay the amount due and unknowingly sweat pouring down his face. He became dull and walked out of the room.
Question: What’s wrong did he do to put himself in this difficult situation??
Answer: He is a poor student when comes to financial management.
Emergency Fund: It is an amount of money that will come in handy when there is an emergency in life.
Some amount every month from your salary in a separate account and it must be only used when there is a life and death situation.
If Chiranjeevi is having an Emergency corpus for sure he will enjoy the new release movie of his favorite hero with peace of mind.
– Venkatesh Veera