CA shares 3-3-3 rule to build emergency fund to save you in financial crisis

In the race to grow wealth, many overlook the true purpose of an emergency fund. It’s not about chasing high returns or flashy investments — it’s about having quick, reliable access to cash when life throws a curveball. CA Nitin Kaushik breaks down the common mistakes people make with emergency funds and shares a smart, practical strategy to build one that works when you need it most.

Kaushik points out that too many people park their emergency savings in mutual funds or fixed deposits, chasing better returns but sacrificing immediate access. The problem? Emergencies don’t wait for market days or withdrawal penalties to clear. Whether it’s job loss, medical crisis, or family emergencies, your money needs to be instantly available. An emergency fund stuck in a slow, complex process defeats its very purpose.

What is the CA's 3-3-3 rule?
His key advice: focus on liquidity and peace of mind, not on returns. He recommends the 3-3-3 rule for structuring your emergency fund—divide it into three parts: Rs 30,000 in a high-interest savings account (preferably with a small finance bank offering 6-7% interest and insurance cover), Rs 30,000 in a sweep-in fixed deposit that breaks automatically when needed, and Rs 30,000 in a liquid mutual fund as a secondary backup. This combination balances accessibility with modest returns.

Kaushik warns against common pitfalls like using hybrid or equity funds for emergencies, stressing that your emergency fund is your safety net—not a side hustle to maximise gains. He also advises ensuring you have proper health insurance so medical expenses don’t wipe out your cash reserve.

Everyone’s chasing returns.
But here’s what they don’t tell you —
There’s one place where earning less can actually save you more.

Let’s talk about the most misunderstood fund in personal finance:
Your Emergency Fund. 🧵👇#stockmarketscrash #finance #nifty #investingtips pic.twitter.com/T5kTbx68Ho

— CA Nitin Kaushik (@Finance_Bareek) August 10, 2025

The takeaway is simple but powerful: prioritise instant access over high returns, value peace of mind above market gains, and prepare for the worst so you’re never caught off guard. Don’t wait for an emergency to realise this the hard way. The CA concludes by saying that build your safety net today—and keep it boring, because that’s exactly how it’s supposed to be.