A regular salary can pay the bills, fund a lifestyle and help meet short-term goals. But for salaried professionals, financial stability is not just about how much money comes in every month — it is also about what happens when that income is disrupted or a large unexpected expense arrives.
In a LinkedIn Post, certified financial planner Vijay Maheshwari identified three essentials for salaried employees: an emergency fund, health insurance and systematic investment plans (SIPs) in mutual funds.
The three serve different purposes — one provides liquidity during emergencies, another protects savings from healthcare costs, while the third is aimed at long-term wealth creation.
1. Build an emergency fund before chasing returns
The first safety net is an emergency fund.
Maheshwari recommends keeping savings equivalent to six months’ salary in a fixed deposit (FD) or liquid fund.
For example, someone earning ₹50,000 a month would target an emergency corpus of around ₹3 lakh.
The objective is not to maximise returns but to ensure that money is available when it is needed. Job loss, an unexpected medical requirement or a sudden large expense can otherwise force a person to borrow or dip into long-term investments.
An emergency fund therefore acts as a financial buffer between an unexpected event and a person’s regular income.
For someone just starting out, building the corpus gradually can be more practical than trying to accumulate six months’ salary immediately. A portion of each month’s income can be diverted towards the fund until the target is reached.
M. Pattabiraman, the author of “You Can Be Rich Too with Goal-Based Investing and Gamechanger”, makes the distinction even more clearly. He recommended accumulating an amount equivalent to six times monthly expenses, while stressing that an emergency fund is not an investment but a cash holding that should remain accessible.
“An emergency fund is neither saving nor an investment. It is a simple cash holding.”
That means a person earning ₹1 lakh a month but spending ₹60,000 on essential expenses does not necessarily need ₹6 lakh simply because their salary is ₹1 lakh. Their emergency requirement could be based on the ₹60,000 monthly outflow, adjusted for their individual circumstances.
2. Don’t let a medical emergency wipe out your savings
The second layer is health insurance.
Maheshwari recommends health cover of ₹10 lakh-₹25 lakh, with features such as 90% or higher claim settlement, no room-rent limits and restoration benefits.
The underlying principle is straightforward: even a well-built savings corpus can take a significant hit if a family member requires expensive hospitalisation.
Health insurance is therefore intended to separate healthcare expenses from money earmarked for other financial goals.
Employer insurance may not be enough
Salaried employees often assume their employer’s group health policy takes care of this requirement.
But the cover may change when you change jobs, retire or leave the workforce. Employees should therefore examine the sum insured, room-rent restrictions, exclusions, waiting periods, co-payments, restoration benefits and coverage of dependants rather than simply ticking the “health insurance” box.
The aim is not to buy the largest policy available. It is to ensure that a medical event does not force you to liquidate investments or take on expensive debt.
3. Put a part of every salary towards long-term wealth creation
Once immediate financial protection is in place, the third pillar is investing regularly through SIPs in mutual funds.
Maheshwari suggests investing 10-20% of monthly salary through SIPs.
For someone earning ₹50,000 a month, that would translate into an investment of around ₹5,000-₹10,000 every month.
The recommendation is to increase the investment as income rises and diversify across three to four mutual funds, with the objective of allowing wealth to grow through compounding.
The key advantage of an SIP is the discipline of investing a fixed amount at regular intervals rather than trying to time the market.
For a young salaried employee, the long investment horizon can also make consistency particularly important. The longer money remains invested, the more time there is for returns to potentially compound.
As Maheshwari explained, “Your salary pays the bills, but your financial habits secure your future.”
What should a ₹50,000 salary earner do?
Consider a salaried employee earning ₹50,000 a month whose essential monthly expenses are ₹30,000.
Instead of automatically targeting ₹3 lakh because that is six months of salary, the person could initially target around ₹90,000-₹1.8 lakh, equivalent to three to six months of essential expenses.
If the person is the sole earner, has a home loan or supports dependants, a larger buffer could make sense.
Once the emergency fund is sufficiently built and health insurance is in place, the employee could start a SIP of ₹5,000 a month and increase it gradually with salary growth.
The exact allocation, however, should be determined by the individual’s goals and risk capacity rather than a blanket 10-20% formula.
