Building an emergency fund in a high-inflation economy

Building an emergency fund is a difficult task as it involves saving aggressively in the present to secure your savings and investments in the future. Building this fund during a high-inflationary phase, however, is doubly hard. With the prices of goods and services rising, it is difficult to save considerably in most Tier-I cities in India in 2024. Here is how you can build an emergency fund even during a high-inflation economy.

Building an emergency fund in a high-inflation economy 1

How to build an emergency fund in a high-inflation economy?

Building an emergency fund using a high-yield savings account might seem like an easy thing to do, however, it is a lot more difficult when the inflation levels are high. Here is a six-step plan to help you build an emergency fund in a high-inflation economy:

  • Start budgeting consistently and come up with a spending plan: If you aren’t in the habit of budgeting monthly, you must start doing so at the earliest. Try being as consistent as you can after forming this habit, as it will help you with all the data required to help you save more. You must infer learnings from your monthly budgets and come up with a spending plan that can help you strategically maximise your savings.


  • Choose the right online savings account and automate your regular savings: Next, you should choose a high-yield savings account (preferably an online savings account) that can be managed through a mobile banking app. An online savings account with an efficient mobile app will help you automate your savings too. You can indulge in the occasional expensive purchase if your savings for the month have already been handled.


  • Allow yourself to indulge once in a while: It is important to not give up on everything while trying to build your emergency fund in a high-inflation economy. You must continue to spend money on goods and services that make you happy. However, you must endeavour to maintain a balance by cutting down on other unnecessary expenses.


  • Go through all your online subscriptions and evaluate their importance: Check all your OTT subscriptions and other online subscriptions that deduct money automatically from your bank account. Analyse if you truly require these subscriptions and unsubscribe from these services if required. You can also opt for a shared OTT account if you wish to reduce the amount that you are paying monthly.


  • Keep an eye on unexpected funds: Oftentimes, you can receive money from non-conventional places. For instance, the old insurance policy purchased by a parent or the returns of an ELSS (equity-linked savings fund) scheme that you subscribed long ago. These extra funds can help you further build your emergency fund.


  • Get a health insurance plan: While building your emergency fund, you must also try and save for a health insurance plan. Remember that a health emergency is a direct threat to your savings. You must have health insurance to secure your savings in the future.


In conclusion, to build an emergency fund in a high-inflation economy, you must budget regularly, open an digital savings account, and remove unnecessary online subscriptions. You must also allow yourself to indulge by allotting money for extra spending and search for lost funds.

Elizabeth R. Cournoyer

Web enthusiast. Internet fanatic. Music geek. Gamer. Reader. Hipster-friendly coffee practitioner. Spent 2001-2007 merchandising human hair in Fort Lauderdale, FL. Spent 2001-2007 short selling tinker toys in Fort Walton Beach, FL. Spent 2001-2007 importing acne in Phoenix, AZ. Spent several months importing methane in Mexico. Spent the better part of the 90's creating marketing channels for wooden horses in Bethesda, MD. Lead a team implementing toy monkeys in Deltona, FL.

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