Contigency Planning
Plan for uncertainities in life which puts you in financial hardship. There are certain events which are uncertain in nature and their severity is also unquantifiable . People ignore the fact that they have to plan for meet any kind of contingency. One has to set aside a ceratin percentage of saving in liquid funds so that they can withdraw and utilize for the event. In continegency planning one has to identify the likelihood of uncertain events which may or may not occurs. Severity of events will decide how much funds we need to keep in liquid funds so that in the times of emergeny one can easily utilize.
It is advisable to keep three to six months of your income in liquid and money market funds to meet with any short term uncertainities.