What emergency corpus is needed for ₹70K monthly expenses?
Scenario
Anjali, age 35, mid-career marketing manager in Mumbai, ₹18 lakh annual income, married with one child, ₹70K monthly household expenses
Inputs
- Liquid return %
- 5
- Recommended months
- 6
- Monthly expenses INR
- 70000
Calculation
- 1.
Recommended months of expense coverage
Based on income stability + dependents → 6months
- 2.
Emergency corpus needed
₹70,000 × 6 → ₹4.20 L
- 3.
Annual return if parked in liquid fund (5%)
Corpus × 5% → ₹21,000
- 4.
Real return after 6% inflation
Corpus × (5% − 6%) → ₹-4,200
Conclusion
₹4,20,000 emergency corpus = 6 months of expenses. Parked in liquid fund earns ~₹21K/year but loses ~1% real value to inflation — accept this cost for the protection.
Tradeoffs
Single-earner households need 9-12 months (vs 6); business owners need 12-18 months. Don't park in equity (volatility risk when needed). Don't park in long-term FDs (premature-exit penalty defeats accessibility).