Emergency Fund: How Much Is Enough?
The answer isn't "6 months expenses." It depends on your situation.
A Better Framework
Income stability: - Highly stable: 3-4 months - Moderately stable: 6 months - Less stable: 9-12 months - Self-employed: 12+ months
Adjust for: - Single income: add 2-3 months - Dual income: reduce 2 months - Heavy EMIs: ensure fund covers EMIs
Where to Keep It
- Accessible: withdraw in 1-2 days
- Stable: value doesn't fluctuate
- Separate: not mixed with regular savings
Options: Savings account, liquid funds, short-term FDs.
The emergency fund isn't about returns. It's about buying peace of mind.