Your health insurance plan is in place, but what about the expenses which it will not cover? That is when a medical contingency fund bails you out.
1. A medical contingency fund should be your first financial goal to ensure that you are able to maintain the same lifestyle for a reasonable period of time caused due to the medical emergency.
2. This money should be kept in a specifically allotted liquid instrument to take care of any unforeseen medical urgency and consequent loss of income.
3. It should be big enough to take care of the targeted emergency, as anything smaller than the optimal amount will defeat the purpose of setting it up.
4. On the other hand, a contingency fund bigger than your requirement will mean an investment opportunity loss.
5. A good estimate is about 6 months of net living expenses, excluding any loans to repay.
6. Break this amount into smaller amounts and try to accumulate these in stages by identifying and setting aside the savings that can be apportioned to build this contingency fund.
7. A standing instruction for an automatic monthly transfer to a fixed deposit, or a monthly systematic investment plan in a short-term debt fund, will enable you to achieve this.
8. Also move any savings and excess income like bonus for achieving this goal.
9. Be disciplined about withdrawal from the fund only for medical exigencies, and replenish it as quickly as possible.
10. Review the fund amount periodically and increase it in line with your current income and expense profile.
1. A medical contingency fund should be your first financial goal to ensure that you are able to maintain the same lifestyle for a reasonable period of time caused due to the medical emergency.
2. This money should be kept in a specifically allotted liquid instrument to take care of any unforeseen medical urgency and consequent loss of income.
3. It should be big enough to take care of the targeted emergency, as anything smaller than the optimal amount will defeat the purpose of setting it up.
4. On the other hand, a contingency fund bigger than your requirement will mean an investment opportunity loss.
5. A good estimate is about 6 months of net living expenses, excluding any loans to repay.
6. Break this amount into smaller amounts and try to accumulate these in stages by identifying and setting aside the savings that can be apportioned to build this contingency fund.
7. A standing instruction for an automatic monthly transfer to a fixed deposit, or a monthly systematic investment plan in a short-term debt fund, will enable you to achieve this.
8. Also move any savings and excess income like bonus for achieving this goal.
9. Be disciplined about withdrawal from the fund only for medical exigencies, and replenish it as quickly as possible.
10. Review the fund amount periodically and increase it in line with your current income and expense profile.