When was the last time you roamed around with Rs 300-400 in your pocket with nothing else to fall back upon? Most of us are going through such a situation now. Addressing unexpected financial situations should be part of everyone’s financial plan but the question is how does one deal with such a situation. Here are some crucial aspects that one needs to incorporate in one’s financial plan to tide over unforeseen circumstances.
1. Have a contingency plan
To have a contingency plan is the first step in planning ones finances. We have often seen people not planning for their liquidity requirements. This happens because most of the investments done do not take into consideration one’s own requirement and it is done in a sporadic manner. We suggest that an individual maintain funds equivalent of cash flow requirements for at least six months in investments that are easily accessible in a day’s notice and also yields better returns compared to a savings bank account. We suggest people could look at fixed deposit or liquid funds of mutual funds after taking into consideration the tax implications of both.
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Read the full article here