Money Magazine - Oh Shit Money!
Oh shit money is nothing but emergency fund which is very resourceful when you are stuck in Oh Shit Situation. Let’s call it Oh Shit Kitty.
An Oh Shit Kitty is an easily accessible stash of money for use only in case of oh shit situation. It is not to be used to buy a new car. It is not to be used to buy a new PlayStation. It is not to be used to remodel your bathroom. It is for use only in case of emergency.
Who Needs Oh Shit Kitty?
Most experts agree that everyone, regardless of socioeconomic class, needs an emergency fund.
Banks and other financial institutions don't label accounts as “Oh Shit Kitty." That designation exists only inside the fund owner's mind.
How Much Is Enough?
Though personal finance experts agree emergency funds are necessary, there is no consensus on how much is enough. Some say you need to save a year’s salary. Others believe Rs 15000 is sufficient. Most advice tends to fall someplace in the middle.
How much do you really need?
As usual, I recommend that you do what works for you. There is no one right answer. Examine your situation — your income and your needs — to decide how much you should save.
Ideally if you are a salaried or have regular income I, would recommend you to have Oh Shit Kitty of your 3 months expenses. If not, If you live on variable pay or run a business its recommended to have 6 months expenses in your kitty. So if your monthly expenses are 25,000 it’s always recommended to have 75,000 or 1,50,000 in your kitty.
Where to park your Oh Shit Kitty?
It’s always recommended to park your kitty in such a way that it is immediately accessible to you and at the same time it should be working and earning interest so parking your kitty in a saving account will get you just 4%p.a whereas if you park it in a fixed deposit it will earn an interest of 8-9%p.a and an FD can be liquidated very easily just with a mouse click and with no or very negligible penalty.
Banks and other financial institutions don't label accounts as “Oh Shit Kitty." That designation exists only inside the fund owner's mind.
How Much Is Enough?
Though personal finance experts agree emergency funds are necessary, there is no consensus on how much is enough. Some say you need to save a year’s salary. Others believe Rs 15000 is sufficient. Most advice tends to fall someplace in the middle.
How much do you really need?
As usual, I recommend that you do what works for you. There is no one right answer. Examine your situation — your income and your needs — to decide how much you should save.
Ideally if you are a salaried or have regular income I, would recommend you to have Oh Shit Kitty of your 3 months expenses. If not, If you live on variable pay or run a business its recommended to have 6 months expenses in your kitty. So if your monthly expenses are 25,000 it’s always recommended to have 75,000 or 1,50,000 in your kitty.
Where to park your Oh Shit Kitty?
It’s always recommended to park your kitty in such a way that it is immediately accessible to you and at the same time it should be working and earning interest so parking your kitty in a saving account will get you just 4%p.a whereas if you park it in a fixed deposit it will earn an interest of 8-9%p.a and an FD can be liquidated very easily just with a mouse click and with no or very negligible penalty.
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