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The First Step to Wealth: Your Financial Lifeboat

The First Step to Wealth: Your Financial Lifeboat

Ajay Malhotra
February 10, 2025 • Estimated Reading Time: 4 minutes

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Your Financial Lifeboat

Before you build wealth, you need a financial safety net.

In 2020, my world turned upside down. My parents got COVID, and hospital costs skyrocketed.

At the same time, we needed extra laptops and better internet to keep up with work. If I didn’t have an emergency fund, I would have been scrambling—not just emotionally but financially.

Emergencies don’t wait for a convenient time. They hit hard and fast, demanding your full attention—and your money.

That’s why before you chase high returns in stocks, real estate, or crypto, you need an emergency fund. Think of it as learning to swim before attempting to surf.

How Much Do You Need?

A solid emergency fund should cover six months of essential expenses. But how much is that for you?

Let’s break it down with a real example:

That’s the financial cushion needed to sleep peacefully at night, knowing that even if life throws a curveball—job loss, medical emergency, car breakdown—you’re covered.

How to Build Your Emergency Fund (Without Feeling Broke)

Start Small, Stay Consistent: Saving doesn’t have to be painful. Start with ₹10,000 or $500 and build from there.
Prioritize It Like Rent: Before investing in stocks or upgrading your lifestyle, secure your emergency fund first. It’s like eating your veggies before dessert—boring but necessary.

Where to Keep It (Without Risking It)

Your emergency fund should be safe and accessible, not chasing high returns. Here’s where I keep mine:

Fixed Deposits – Reliable and easy to withdraw.
Liquid Funds – Better returns than savings accounts, with a one-day withdrawal time.
Arbitrage Funds – Low-risk and tax-efficient.

Whatever you do, don’t put your emergency fund in stocks or crypto. That’s like storing water in a colander—completely useless when you need it most.

Bonus Tip: Use Credit Cards Wisely

If you need cash instantly, a credit card can be a temporary lifesaver—but only if you repay it immediately. It’s a tool, not a crutch.

Final Thought: Take Action Today

If you don’t have an emergency fund yet, start today. Even $500 in a separate savings account is a step in the right direction.

Already have one? Reply and tell me where you keep it—I’d love to hear your strategy.