Should I build emergency fund before investing?

Yes! Build at least 1-2 months of expenses first, then start SIPs while continuing to build the emergency fund to 6 months. Don't delay investing entirely though.

Is ₹1L enough for emergency fund?

Only if your monthly expenses are ₹15,000-₹30,000. For most urban professionals with expenses of ₹40,000-₹80,000/month, you need ₹2.4L-₹4.8L minimum.

How to Build Your Emergency Fund

An emergency fund is 3-6 months of expenses kept in easily accessible form to handle job loss, medical emergencies, or unexpected expenses without going into debt.

How Much?

Minimum 3 months expenses for dual-income households. 6 months for single-income families. 9-12 months for self-employed or freelancers. Include rent, EMIs, groceries, utilities, insurance premiums.

Where to Keep It

Split across: (1) Savings account (1-2 months for instant access), (2) Liquid mutual fund (2-3 months, redeems in 1 day), (3) FD with sweep-in facility (remaining amount). Don't invest emergency funds in equity or lock-in instruments.

Building Strategy

Start with ₹1,000-₹5,000/month SIP into a liquid fund. Automate transfers on salary day. Put windfalls (bonus, tax refund) directly into emergency fund. Target completing it within 12-18 months.