Goal Planning

Emergency fund as the name suggests is the money that you would touch when you have an emergency.

Emergencies could be :

Before I bought my house in 2010, I was grappling with this thought whether to buy or rent ? . I was living in a rented house and was paying Rs 8000/- as rent. My parents insisted on buying a house and the EMI was Rs 14,000/- per month. I argued that the rent amount was much lesser and insisted that we live in a rented house as the EMI is much higher than the rent. As with any middle class family, my parents had their way and we eventually bought the house.

November 2002 - I boarded the train from Mumbai to Pune to take up my first job. Net income was Rs 15,000/- We were working in one of the top IT service companies and quite excited. I used to meticulously write my expenses on daily basis. Very soon, I had made some good friends. I was eating out regularly. There was one late night movie every week, parties during the week. I stopped writing my expenses. Every Friday there was a Sumo ready to take us back to Mumbai and every dreadful Monday, there was one to take us back to office. By the time I left my first job and moved to the second one, I had Rs 4000/- in my bank account (2 years of saving).

I was living in a rented house since 2005 when I moved from my parent’s house. Buying a house was quite expensive and I was unsure that I would work so long. Tenure for loans were 15-25 years. EMI’s were more expensive than the rent. I was not sure of many things while buying a house :

I was so excited! My first job. This actually would mean independence. This would also mean that I would have a bank account and there would be a number bigger than 0 in my account. However, with the uncontrolled expenses, my bank account quickly got depleted as soon as my salary came in. Thankfully maturity came and as years passed by, I started gaining different types of assets including a house, a car, few more savings account, a fixed deposit, mutual fund , stocks etc…