New Delhi, Sept. 8 -- Having a large amount of money in the bank does not necessarily mean that you are financially secure. The more important question is whether your savings can keep your household running if your income stops or an unexpected financial shock hits.

The right financial cushion depends on your monthly expenses, liabilities, dependants, income stability, insurance coverage and stage of life. Financial planners generally recommend building the cushion around expenses rather than income because it is meant to replace cash flow when earnings are disrupted.

The first step is to calculate your total monthly outflow. This should include essential household expenses as well as financial commitments that cannot be postponed.

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