7 Strategies to Build Personalized Rock-Solid Financial Safety Net

Income is not enough for a long-term financial goal. When you set a long-term financial goal, you can easily have a long-term safety net, say for 6 months or one year. Everybody faces issues and uncertainties. Therefore, to have a good backup, it is important to build a rock-solid safety net at the earliest.

For 6 months, we can build a one lakh or two lakh rupees liquid fund as an emergency fund, which is highly important. Therefore, you can survive huge expenses like medical or sudden job loss.

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First, you need to analyze how much your income is and how much debt you have. Therefore, you have to understand how much to save and how much to invest for a long-term financial goal and safety net.

Instead of a total amount, calculate your actual monthly expenses like housing, utilities, food, transportation to determine a realistic goal. Try to save enough money to cover three to six months of living expenses in a designated high-yield savings account. For those with irregular income, the six month target is safer.

Changes in your life, such as a new job, appraisal or a new home, means your financial safety net needs updating. Review your budget and savings goals at least once a year to ensure your safety net is appropriate for your current situation.

(Disclaimer: Given the input is on an information basis, please seek professional advice.)