Personal Finance -

How to Build an Emergency Fund From ₹0 to ₹1 Lakh

Unexpected expenses have a way of coming when you least expect them. A medical bill, layoff, home repair, or car repair can wreak havoc on your finances if you have no savings to fall back on. That is what an emergency fund can help with. Having an emergency fund can help put you in a better position to survive a financial emergency without immediately relying on credit cards, loans, or other high-interest debt. But how are you supposed to build an emergency fund from 0? Surely reaching a target of 1,00000 seems intimidating at first, but there are some ways to help you through this. What is an emergency fund? An emergency fund is a stash of cash saved for a financial emergency. It should be money that is set aside to cover essential expenses only and not for splurging on gadgets, vacation, etc. What can come under an emergency fund? The money saved as an emergency fund must be easily accessible as we do not have the time to wait for it to mature. Why should I open an emergency fund? Without an emergency fund or any savings, any random expense that comes our way can leave us with having to make terrible financial decisions. Suppose your car breaks down and it needs a 20,000 repair. If you do not have any emergency fund, you will either have to pay it off with your credit card or take a loan. But the 20,000 repair would now become 25,000 due to the interest. An emergency fund can help you avoid such financial stress, give you breathing room and freedom of choice in a financial crisis. Some of the advantages of an emergency fund are: It is not about getting rich quick; it is about getting safe. Is 1 Lakh a good emergency fund? 1 Lakh is a good target to reach for, but for most of us, it may not be enough for a proper emergency fund. The amount of money needed for an emergency fund varies from person to person. For someone for whom 40,000 is essential expenses, 1 Lakh may be a good emergency fund. But for someone for whom 60,000 is their monthly essential expenses, 1 Lakh may not be enough. In order to determine your emergency fund, you must calculate your monthly essential expenses, your monthly income and then decide how much you can save on a monthly basis considering your monthly expenses. You may also want to think about your monthly debt payment, family, lifestyle, and so on. Once you reach 2-3 monthly expenses, you would have a good emergency fund. The target of 1 Lakh is a good target for a beginner to set their eyes on in order to develop the saving habit. Once you are done with 1 Lakh, you can slowly move towards setting your target at multiple monthly expenses. Steps to make an emergency fund Step 1: Think about ₹0 emergency fund with ease Forget about how much money you currently have in your emergency fund. Focus on getting to 1,000 first and then 5,000, then 10,000 and so on till you reach 100,0000. It does not matter much if today I save 50 or if today I save 500. The first target is to show yourself that you can stick to saving. Step 2: Calculate your monthly income Calculate your monthly income. It must be an approximate figure. If your income varies from month to month, use the lowest figure as your monthly income. Step 3: Track your expenses You cannot save money if you do not know where your money goes. Track your expenses for a month. You will know which expense is eating up a lot of your money. Categorize your expenses. You can use your net banking transaction history or your UPI transaction history or your credit card statement and so on. Once you sort out your expenses, take a look at what all you can cut down on. You can cut down on just 50-100 from each category. It will slowly start adding up. Step 4: Set a target for your monthly savings Now set a target for your monthly savings. For example: Monthly Saving Time to Reach ₹1 Lakh ₹1,000 100 months ₹2,500 40 months ₹5,000 20 months ₹7,500 About 14 months ₹10,000 10 months ₹12,500 8 months ₹15,000 About 7 months ₹20,000 5 months This does not take into account any profits earned from the money saved. Step 5: Let your money work for you Let your money work for you. The best way to do this is by automating your savings. Instead of waiting for the end of the month to save some money, immediately after you receive your income, save around 5,000 in a separate account. It will keep you from spending the money that you were supposed to save. You can think of your emergency savings as your monthly dues. Step 6: Open an emergency savings account Do not keep your emergency fund in your savings account. It is best to keep it separate from your everyday transaction account so that it does not become a temptation to use the money in your emergency fund for everyday expenses. The emergency savings account should be: The most important thing is to keep your emergency fund safe and accessible in case of an emergency. Step 7: Cut down on unnecessary expenses You do not need to change your entire lifestyle in order to save 1 Lakh. Try and cut down on unnecessary expenses. Instead of looking for what all you can change in your lifestyle, look for those expenses that do not give you value for money. For example: If you cut down on these and instead put the money into your emergency fund, you will surprise yourself with the amount of money that you will be able to save. Step 8: Use your extra income You can also use your extra income to save money for your emergency fund. Whenever

Personal Finance

How to Create a Monthly Budget: A Beginner’s Guide 2026

Goo Finance / September 28, 2026

Managing your finances can prove to be more challenging than you anticipated if you do not have a proper understanding of where your hard-earned money goes. Even if you have sufficient income to meet all your expenses, there might still be times when you wonder where all your money went in a blink of an eye. A monthly budget can help you avoid such situations because it serves as an ultimate guide to managing your earnings, expenses, debts, and savings. Moreover, it enables you to stay ahead of your spending. If you have no prior knowledge or experience regarding finances, do not worry. We have a practical solution that all newcomers can follow to create a comprehensive monthly budget with ease and convenience. The Ultimate Guide on How to Make a Monthly Budget What Is a Monthly Budget? A monthly budget simply means a plan or an estimate of how you intend to spend your monthly income. It is a self-explanatory record that highlights your monthly income, expenses, savings, and debts. In other words, a budget helps you understand what you want to achieve financially. It prevents unplanned spending and puts financial discipline in your spending pattern. A sample monthly budget may consist of the following: The objective of a monthly budget is not to restrict your spending. It aims to help you prioritize your expenses according to your financial status and the achievement of your financial goals. Why Creating a Monthly Budget Is Worth Your Time? Without a financial plan, it becomes impossible to keep track of your expenses. It can also be overwhelming when you realize how much you actually spend on a cup of coffee or other mindless activities. In such a case, a well-crafted monthly budget can become your best friend. Here are some reasons why a budget is essential: A monthly budget can also help you stay calm and relaxed about your finances. How to Make a Monthly Budget: Step-by-Step Guide? The simplest method to create a monthly budget is to calculate your monthly income first. If you have a permanent or a stable source of income, then it will be easier for you to prepare an estimated record of your monthly earnings. Remember, you should consider your net income (the amount of money earned after deducting all applicable taxes) while creating a monthly budget. On the other hand, if your income varies from month to month, then you should create a realistic estimate based on your average monthly earnings. For instance, your monthly income consists of: List All Your Fixed Monthly Expenses When we talk about the monthly budget, the first thing that comes to mind is monthly expenses. A monthly budget should ideally highlight your monthly expenses, which include both your fixed and variable expenses. Start with your monthly fixed expenses because they remain the same or vary slightly every month. 2. Some common examples of monthly fixed expenses are: So, after calculating your monthly income, keep a track of all your monthly bills to determine how much percentage of your income is utilized in your monthly expenses. Variable expenses are the ones that vary from time to time or from one month to another. It is always a good idea to keep a track of your variable expenses for at least a month to identify your monthly spending pattern. Some common examples of variable expenses are: In this step, instead of estimating your expenses, it is better to go through your bank account statements or digital wallet transactions and categorize them accordingly. One of the easiest but the most effective ways to create a monthly budget is to sort your expenses into needs vs wants. Your needs mean the things that you cannot live without, whereas your wants are just luxuries that you can live without. For instance, your needs may include: However, your wants may include dining out, latest gadgets and technology, entertainment subscriptions, etc. It is a myth that people with a good income do not save any money. The truth is that people with a high income can also save a significant amount of money if they have a proper budgeting plan. So, it is essential to set realistic monthly savings objectives. To begin with, keep in mind that in a good monthly budget, at least 10% of your income should be allocated towards your savings. In most cases, people save money with specific purposes in mind, such as: So, to begin with, decide on your monthly savings target because it will keep you motivated as you will feel that all your hard work is leading you towards the achievement of your financial goals. An emergency fund plays a critical role in every person’s financial journey. A sudden emergency, unplanned medical expenses, or car repaircan cause a sudden withdrawal of your hard-earned money at the wrong time So, when creating your monthly budget, you should also keep in mind to set aside some money for your emergency fund. To begin with, it is a good idea to save at least Rs. 500 from your monthly income as an emergency fund. However, once your emergency fund grows significantly, you should invest that in a separate bank account so that you cannot just keep touching the money in case of minor issues. In the long run, it is a good idea to save at least 6 months of living expenses as your emergency fund. If you have any loans or credit card dues, then it is essential to highlight your monthly debt repayment plan in your monthly budget. To begin with, create a list of all your debts, along with their interest rates, outstanding amount, and minimum monthly payment. In your monthly budget, always make sure that the money you keep aside for your debt comprises the minimum amount owed. Always pay off that minimum amount on time so that you do not have to pay any late fees. In addition, you can also pay an extra amount to pay

Personal Finance

How to Build an Emergency Fund From ₹0 to ₹1 Lakh

How to Create a Monthly Budget: A Beginner’s Guide 2026

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