How can a Savings Account help build an emergency fund?

Ever wondered what an emergency fund is? It is a stash of money set aside to cover up unanticipated expenditures of financial exigencies, such as four-wheeler repairs, medical bills, or sudden unemployment. The importance of emergency savings lies in offering mental peace, and financial security, ensuring you can manage unforeseen financial challenges without dipping into debt.

Why do you need an emergency fund?
 

Financial security

Holding an emergency fund ensures you are financially prepared for unanticipated situations. It serves as a buffer, safeguarding you from financial stress that comes with exigencies and enables you to maintain your living standard without resorting to credit cards or loans.

Avoiding debt

With an exigency fund in place, you can avoid heavy-interest debt. Instead of borrowing funds at exorbitant rates, you can utilise your saved funds to cover up contingency expenditures. This assists you to stay out of the debt cycle and maintain your financial health.

Mental peace

Knowing you have a financial cushion endows mental peace. You can concentrate on your regular life and long-term financial goals without continuously fretting about what may happen if a contingency arises.

Opportunity to invest

Holding a contingency fund permits you to take benefit of investment opportunities without hampering your financial security. With a proper safety net in place, you can confidently invest your additional savings, knowing that you have a backup in the scenario of exigencies.

How much should your emergency fund be?

The emergency fund’s size depends on your monthly expenditures and personal financial scenario. Financial experts usually recommend saving six months’ worth of living expenditures. 

Choosing the right Savings Account for your emergency fund

Here are crucial steps to assist you choose the best Savings Account for your emergency fund –

Compare the rate of interest

Look for a savings bank account that offers high interest rates to enhance the growth of your exigency fund. Higher rates infer more earnings on your savings over time.

Check for fees

Consider accounts with zero or minimal fees. Note that financial institutions like IDFC FIRST Bank offer zero charges on commonly used Savings Account services, which can assist save more money.

Assess accessibility

Make sure the savings bank account offers easy access to your funds. Look out for features such as robust banking platforms, and unlimited ATM withdrawals that permit you to manage your bank account conveniently.

Assess additional features

Consider those accounts that offer additional benefits such as expense tracking tools, monthly interest credits and customer support. Such features can assist you in managing your finances effectively.

Strategies to build a prudent emergency fund
 

Set clear goals

When the question of “how to build an emergency fund?” comes up, make sure you begin with a clear goal. Ensure to determine the amount you require for your exigency fund and set clear savings goals. Break down the overall amount into monthly savings targets to ensure the process is manageable.

Automate savings

Set up auto transfers from your savings bank account. This ensures a portion of your income is constantly directed towards your exigency fund without requiring any conscious effort.

Cut unnecessary expenditures

One of the essential financial security tips is identifying areas where you can cut back. Doing so can allow you to redirect the money saved from such expenditures into your contingency fund.

Benefits of using an IDFC FIRST Bank Savings Account for your emergency fund
 

High savings growth

IDFC FIRST Bank endows an exciting high-interest rate, with monthly interest credits. This permits your exigency fund to grow faster, enhancing your savings.

User-friendly digital banking platforms

With IDFC FIRST Bank’s intuitive mobile banking and internet banking, you can simply manage your account, track expenditures, and even invest in preferred mutual fund schemes.

Zero fee banking

Benefit from zero charges on all commonly used savings bank account services, involving NEFT, IMPS, SMS alerts, RTGS, ATM transactions and others.

Monthly interest credits

Interest constituent is computed daily and credited to your bank account monthly, assisting your savings to grow consistently.

Free and unlimited ATM withdrawals

Maintain thorough liquidity and control over your contingency fund with unlimited ATM withdrawals.

24X7 customer support

Enjoy round-the-clock customer support through WhatsApp or phone, ensuring you get assistance whenever required.

Conclusion

Building an exigency fund is a prudent financial approach. It endows mental peace, security, and the potential to manage unanticipated expenditures without stress. By selecting a high-interest savings bank account like IDFC FIRST Bank, you can enhance your savings and leverage numerous benefits. So, do not wait – take the first step towards financial security and open your contingency fund Savings Account today!