At SmartRupee, we look like we are all about long-term planning and savings. We most certainly do emphasise that part of financial planning, but we also acknowledge the undeniable reality: most people have short-term savings needs as well, and nearly everyone needs to have at least some cash saved up for emergencies as well.
The SmartRupee model allows this possibility and captures it in our short-term cash savings model, which we assume every single one of our clients will need. In our short-term cash savings model, we capture two distinct categories: cash you may need for emergencies (things happen, and you would ideally not have to borrow money for situations where you need something extra), and any short-term needs you may have. The short-term needs can include things like saving up for a car or motorcycle, going on a vacation, etc.
Ideally, of course, one would want this to be a number as large as possible to feel completely safe, but one needs to be realistic. At SmartRupee, however, we have determined that the benchmark people should have at all times is three times their monthly salary: if you have that much, you should feel like you can handle short-term cash needs or most emergencies.
Of course, sometimes life can throw even bigger surprises at you, and nobody can be 100% prepared for everything. But this much will help you be prepared for many things that may come your way, and we will help you save a little each month until you hit this point.
Our model assumes that you need to save up for up to three months’ salary in short-term cash needs, and then allows you up to three years to save up in order to get there. Since these are short-term needs that you may need at any given moment in time, we only rely on conservative investments in the form of high-quality fixed income funds with a demonstrated track record.
Once you reach the 3-months’ savings goal, our model will then modify your savings needs downwards to reflect any increases in your salary that may have taken place over those three years.
