18 Mar To 24 Mar 24

Groww Digest
6 Day Course
Theme: Emergency Money

Mar 18 to Mar 24 2024
6 Day Course is a part of our newsletter

series, Groww Digest - all things personal
finance.
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Day 1: Monday
Theme: emergency money
We all need to keep some money as

‘emergency money’.
If something bad happens in our lives, this

emergency money should be able to help us.
This money may be used in situations like:

medical emergencies, loss of income, etc.
Emergency money should be easily available,

kept safely, and should cover most
emergencies.
As a general rule, many people suggest

keeping at least 6 months’ expenses as
emergency money.
Many even suggest 12 months’ expenses or 24

months’ expenses.
The higher the amount, the safer you will be.
Page: 2
Day 2: Tuesday
The more your emergency money, the safer it will be for

you in the near future.
This sounds easy.
But remember, emergency money has to be stored in a

safe low-risk place (bank account, FD, liquid funds, etc).
Low-risk options usually give extremely low returns.
Imagine this: You have Rs 10 lakh.
Case 1: You keep Rs 2 lakh as emergency money and

invest the remaining Rs 8 lakh.
Less emergency money: risky in the short term.

More money invested: good for the future.
Case 2: You keep Rs 5 lakh as emergency money and

invest the remaining Rs 5 lakh.
More emergency money: good for the short term.

Less money invested: lower returns in the long term.
How much emergency money should you have? There is

no single correct answer.
It is a balanced decision we all have to take for ourselves.
Page: 3
Day 3: Wednesday
Places to keep emergency money.
Keeping it in a bank account is a great option — you can

transfer that amount easily using net banking. You can even
take out cash using ATMs 24x7.
The interest rate offered in savings bank accounts is low,

around 2-3%. Many people find this to be too low.
This is why they choose to keep their emergency money in

FDs or liquid funds.
In terms of risk, liquid funds and FDs are extremely low-risk.
But FDs can be tricky — many of them charge a penalty if you

withdraw. Some even require you to visit the bank branch.
If you need money during a holiday, that can be a problem.
Liquid funds are a great option. But it can take 1-2 working
days for withdrawal.
A combination of the above is a great way to store your

emergency money.
If there are other options that seem good to you, you can
explore those also.
Page: 4
Day 4: Thursday
Using emergency money.
When money is easily available, many of us

might spend it.
This is why discipline is extremely important.
Make a list of the things you count as

‘emergency’. Medical, income loss, etc.
Do not use the emergency money for anything

else.
Example: do not use the emergency money to

upgrade your smartphone.
If you need money to spend on

non-emergency items, start collecting that
money separately.
Page: 5
Day 5: Friday
Some people also keep a credit card as a

backup for emergency money.
This strategy may work for some people.
Credit cards come with different benefits and

costs.
Often, they have an upper limit on spending.
Based on these factors, it may make sense for

you to keep a credit card also.
But there can be technical issues with credit

cards.
In case there are problems with the credit

card, you will struggle to get emergency
money when you need it the most.
This is why emergency money should mostly

be kept in the bank, FD, or liquid funds.
Page: 6
Day 6: Sunday
We’ve reached the end of this week’s course

that started on Monday.
Here’s a test you should take. Get pen and

paper!
Question 1:
How much expense should the Emergency
money cover?
-6 months
-12 months
-24 months
-Depends on individual (no fixed limit)
Question 2:
Emergency money should be kept in ____ ?
-Mutual funds
-Liquid funds/Bank account/FD
-Shares of a company
Page: 7
Day 6: Sunday
Question 3:
FD is the only place to store emergency
money. No liquid funds should be kept in
hand for emergency money.
-True
-False
Question 4:
Emergency money can be used _____
-Only for medical/financial emergency

-To buy the new iPhone.
Question 5:
Credit cards have no spending limit and can
always be used in emergency situations.
-True
-False
Page: 8
Day 6: Sunday
Answers:
Q1: Depends on individual (no fixed limit)

Q2: Liquid funds/Bank account/FD
Q3: False
Q4: Only for medical/financial emergency
Q5: False
Page: 9
That’s it for this week!
Want to get Groww Digest in your email?
Click here: Get Groww Digest
See you next week!
—Groww Digest Team
Page: 10

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Groww Digest

Theme: Emergency Money

6 Day Course is a part of our newsletter

Want to get Groww Digest in your email?

Click here: Get Groww Digest

We all need to keep some money as

If something bad happens in our lives, this

This money may be used in situations like:

Emergency money should be easily available,

As a general rule, many people suggest

Many even suggest 12 months’ expenses or 24

The higher the amount, the safer you will be.

The more your emergency money, the safer it will be for

This sounds easy.

But remember, emergency money has to be stored in a

Low-risk options usually give extremely low returns.

Imagine this: You have Rs 10 lakh.

Case 1: You keep Rs 2 lakh as emergency money and

Less emergency money: risky in the short term.

Case 2: You keep Rs 5 lakh as emergency money and

More emergency money: good for the short term.

How much emergency money should you have? There is

It is a balanced decision we all have to take for ourselves.

Places to keep emergency money.

Keeping it in a bank account is a great option — you can

The interest rate oﬀered in savings bank accounts is low,

This is why they choose to keep their emergency money in

In terms of risk, liquid funds and FDs are extremely low-risk.

But FDs can be tricky — many of them charge a penalty if you

If you need money during a holiday, that can be a problem.

A combination of the above is a great way to store your

Using emergency money.

When money is easily available, many of us

This is why discipline is extremely important.

Make a list of the things you count as

Do not use the emergency money for anything

Example: do not use the emergency money to

If you need money to spend on

Some people also keep a credit card as a

This strategy may work for some people.

Credit cards come with diﬀerent beneﬁts and

Often, they have an upper limit on spending.

Based on these factors, it may make sense for

But there can be technical issues with credit

In case there are problems with the credit

This is why emergency money should mostly

We’ve reached the end of this week’s course

Here’s a test you should take. Get pen and

-Only for medical/ﬁnancial emergency

Q1: Depends on individual (no ﬁxed limit)

Want to get Groww Digest in your email?

Click here: Get Groww Digest

See you next week!

—Groww Digest Team

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