High Salary, No Cash? Why Rs 1.8 Lakh Income Isn’t Enough
By ThePip Desk
Even with a Rs 1.8 lakh monthly salary, a Bengaluru techie faced a cash crunch during a family emergency. Learn why high income doesn’t guarantee liquid funds and the importance of an emergency fund.
Imagine earning a great salary, like Rs 1.8 lakh every month, and feeling financially secure. However, a Bengaluru techie recently learned that even a high income doesn’t always mean you have readily available cash when a sudden emergency strikes.
The Hard Truth About Liquidity
This techie’s experience highlights a crucial lesson about emergency funds. Despite significant monthly investments, liquid cash was critically low when needed most.
- Monthly Salary: Rs 1.8 lakh
- Monthly SIP Investments: Rs 80,000
- Immediate ICU Deposit Needed: Rs 2.5 lakh
- Available in Savings Account: Only Rs 32,000
His wealth was tied up in investments that couldn’t be accessed quickly due to redemption delays. With his primary credit card already maxed out, he had no choice but to borrow from relatives in a stressful situation.
Why Your Emergency Fund Matters
This incident sparked a vital discussion among young earners, revealing a common oversight: neglecting an adequate emergency fund. Many pointed out that financial security isn’t just about how much you earn or invest, but also about how quickly you can access your money.
- Aim for an emergency fund covering at least six months of living expenses.
- Consider health and term insurance as essential alongside your emergency savings.
- Keep these funds in easily accessible options like a savings account or fixed deposits.
- Liquid investment options such as arbitrage or liquid funds can also offer quick access.
The overarching lesson is clear: building an emergency fund with easily accessible money is non-negotiable for handling unforeseen crises, ensuring your wealth creation journey is truly secure.