How to Use Savings Account to Save for Emergency

Posted on Thursday, April 27th, 2023 | By IndusInd Bank

Having emergency funds is a crucial aspect of financial planning. In today’s world, unforeseen circumstances such as job loss, medical emergencies, and unexpected expenses can occur at any time. Having a savings account dedicated to emergency funds can provide financial security and peace of mind during such situations. In this blog, we will explore how to use a savings account to save for emergency funds. 

Savings account for emergency funds: 5-step guide

1. Determine your emergency fund needs: The first step to saving for emergency funds is to determine how much you need to save. Financial experts typically advise individuals to save up an emergency fund equivalent to three to six months’ worth of living expenses. To determine your emergency fund needs, make a list of all your essential expenses, including housing, food, utilities, and transportation. Multiply this figure by three to six months to determine your target savings amount.  

2. Open a dedicated savings account: Once you have determined your target savings amount, open a dedicated savings account for your emergency fund. Go for IndusInd Bank Savings Account as it offers high-interest rates and does not have high minimum balance requirements or monthly fees. 

3. Set up automatic transfers: To ensure that you save regularly, set up automatic transfers from your primary checking account to your emergency fund savings account. Determine a fixed amount that you can comfortably save each month, and set up automatic transfers to occur on the same day each month. By automating your savings, you can ensure that you save regularly without having to think about it. 

4. Avoid tapping into your emergency fund: While it may be tempting to use your emergency fund savings for non-emergency expenses, resist the urge to tap into it unless it is a genuine emergency. To avoid temptation, keep your emergency fund savings in a separate account and avoid linking it to your debit card or online payment options. 

5. Re-evaluate and adjust: Periodically re-evaluate your emergency fund needs and adjust your savings accordingly. Life circumstances such as a change in income or new expenses may require you to adjust your emergency fund savings. Review your emergency fund savings at least once a year and make necessary adjustments. 

Choosing the right savings account

Choosing the right savings account for emergency funds is crucial to ensure that your savings grow and are easily accessible in times of need. Here are some factors to consider when selecting a savings account for your emergency funds: 

Interest rates: The interest rate is one of the most critical factors to consider when selecting a savings account for your emergency funds. Look for accounts that offer higher interest rates, as this will help your savings grow over time. IndusInd Bank’s high-interest savings accounts can earn you significant returns over time. 

Fees: When selecting a savings account for your emergency funds, look for accounts with low or no fees. Some banks may charge monthly maintenance fees, transaction fees, or minimum balance requirements, which can eat into your savings over time. Avoid accounts with high fees or choose accounts that offer fee waivers based on certain criteria, such as maintaining a minimum balance or using a direct deposit. 

Accessibility: Your emergency funds should be easily accessible in case of an emergency. Look for savings accounts that offer convenient access to your funds, such as online banking, mobile banking, or an ATM network. Make sure you understand the account’s withdrawal rules, such as the number of free withdrawals per month, and any penalties for exceeding the limit. 

By providing higher interest rates, IndusInd Bank Savings Accounts enable you to maximize your savings earnings. Additionally, you also get to enjoy cashback offers and discounts across top brands so you can save more as you shop. In terms of accessibility, you can manage your savings account with IndusInd Bank using the IndusMobile app. This all-in-one mobile banking app lets you transfer funds instantly, make UPI payments in a few clicks, book FD at attractive interest rates, check account balance and statement 24X7. That’s not all! You can open IndusInd Bank Online Savings Account from the comfort of your home using Video KYC!

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Conclusion: 

To conclude, selecting the right savings account for your emergency funds is a crucial part of financial planning. When choosing a savings account, consider factors such as interest rates, fees, accessibility, overdraft protection, and automatic savings plans. By selecting the right savings account, you can ensure that your emergency funds are secure, accessible, and earning maximum returns. Remember to periodically re-evaluate your emergency fund savings and make necessary adjustments to ensure that your funds continue to meet your needs. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.