What is Emergency Funds: Meaning, Significance, Types and Benefits

What Is the Definition of an Emergency Fund?

What Is the Importance of Emergency Funds?

How to Build an Emergency Fund?

What Are the Types of Emergency Funds?

What Are the Benefits of Emergency Funds?

FAQs about Emergency Funds

Where do I store my emergency fund?

Upon determining how much money you have to store in your emergency corpus, you must keep it in a safe and secure reserve. Ideally, a savings bank account is the way to go, as it allows for high liquidity.

How do I redeem my emergency funds?

You may redeem your emergency fund whenever you wish to. Many financial institutions swiftly credit up to 90% of your funds to an account of your choice.

What expenses to consider while determining the size of an emergency corpus?


It would be best if you considered all sorts of living expenses while building your emergency corpus, including:

  • House mortgage or rent
  • Healthcare expenses
  • Food
  • Clothing
  • Travel expenses
  • Utility bills such as electricity and gas
  • OTT subscription fees
  • EMIs
  • Insurance premiums
  • Shopping, etc.