42666This is how low salary people should avail credit card benefits!

By now, I am sure a lot of people must have heard of the term “emergency fund” and the need for having it in place. People like my peers and me have cried ourselves hoarse, asking clients and prospects that we speak to, to create a rainy- day fund.

While earlier, we were often faced with arguments about the chances of having to face such “rainy days”, the pandemic and the destruction it was brought with it have helped to advocate for the need for it. There is enough material available on “why” we need an emergency fund, so I won’t bore you with these details, but instead, I will answer another FAQ, i.e., “how” to create an emergency fund (EF), especially when a family may not have substantial saving happening due to decreased income, high expenses, etc. Before I share some tips, I want you to repeat the following words in your mind or just read them aloud: “No amount is too small for my emergency fund”.

Let’s get started:

1. If you order from outside say four times a month, cut down on one meal from outside and add this money to your EF. You will end up saving anything between Rs 400-2,000 a month depending your family size and lifestyle.

2. Check your mobile plans, especially if postpaid. Cell phone companies often come out with better plans frequently and you may end up saving Rs 100-300 per billing cycle but just checking and upgrading your plan. See if reverting back to prepaid works for you, to save even more.

3. Since we have all not been able to go for movies for a long, long time, add what your family would have spent on one visit to the movies (yes, pop-corn included) each month to your EM.

4. Do you find yourself adding things to your shopping cart of various e-commerce apps frequently? Use the rule of 72 hours. Let these items remain in your cart for 72 hours and see if you still want these things that bad. You won’t believe how much you will end up saving on impulse shopping. Keep track of the items you remove from your cart and shift their value to your EF.

5. How much fuel have we ended up spending on in the last year? Or cab fare? Or auto fare? Or train pass fare? Whatever it is you have not spent, shift to the EF.

6. Set a fixed amount aside each month as if you were to have to pay it to a loved one. Doesn’t matter how small the amount is. Shift this to the EF as soon as you have money in your bank account.

7. Found some cash you left in your pockets after the clothes are washed? Add it to the EF. That money was lost for you anyway.

8. Clean out your purse, bag, wallet, etc. periodically and you will be surprised with how much money you find in there that you had practically forgotten about.

9. Any gift, bonus, extra money that you get from anyone, just transfer to the EF. You were not banking these for your expenses anyway.

10. Last, but not the least, designate a separate bank account/e-wallet to accumulate these amounts so that you see the actual growth in the emergency fund and also avoid using it up for regular expenses.

(The writer is founder, SOLUFIN. Views expressed are personal)