Read-only hosted copy of the demo atlas (original sample text). The ask box needs the local app: project page · GitHub
A Short Guide to Home Budgeting · Chapter 2

Safety nets

Emergency fund, debt basics and insurance.

control / defensethreat / weak pointasset / sensitive itemflow / infrastructure
SECTION 1

The emergency fund

A cash reserve of three to six months of essential costs, kept separate and reachable.

Textbook open at p.3
Start: 1 month2,000Typical low: 3 months6,000Typical high: 6 months12,000Keep it in a separate, reachable account; refill after use.
Bars are to scale. Starting with one month beats waiting until you can save the full amount.
TermMeaning
Emergency fundCash reserve for surprises such as job loss or a medical bill; not for planned purchases.
TargetThree to six months of essential costs; start with one month.
Coverage checklist: what the source says here (4 items)
  • Purpose
  • Target size and a worked example
  • Separate, reachable account
  • Refill after use
SECTION 2

Debt basics

Interest is the price of borrowing; compounding makes unpaid balances grow faster.

Textbook open at p.3
M01,000.00M11,020.00M21,040.40M31,061.21M41,082.43M51,104.08M61,126.16
Each month interest is charged on the larger balance, so the bars grow faster over time. Values computed, not decorative.
TermMeaning
Compound interestUnpaid interest is added to the balance, so the next charge is on a larger amount.
AvalanchePay the highest interest rate first; saves the most interest.
SnowballPay the smallest balance first; quick wins.
Beyond the book – verify: Real loans may compound daily or have fees; check your loan terms.
Coverage checklist: what the source says here (4 items)
  • Interest = price of borrowing
  • Compounding with 1,000 at 2 percent example
  • Avalanche vs snowball
  • Choose one and keep to it
SECTION 3

Insurance and risk transfer

Insurance moves a rare, large cost to a company for a small regular premium.

Textbook open at p.3
Youpay the premium monthlyInsurerpools many small premiumsRare large lossfire, illness, liabilityPays above deductibleyou pay the first partEmergency fund + insurancethe fund covers deductibles and small events; insurance covers the large ones
Insure what would be a disaster; skip cover for mere inconveniences.
TermMeaning
PremiumThe regular payment to the insurer.
DeductibleThe amount you pay first before the insurer pays.
Coverage checklist: what the source says here (3 items)
  • Premium and deductible
  • Insure disasters, skip inconveniences
  • Fund and insurance work together
SECTION 4

Quiz and self-check

Scenario questions, scored. Pick the BEST answer.

Chapter 2 quizScore 0 / 3

1. Dev spends 1,800 a month on essentials and has 2,000 saved. He can afford a deposit for a new gadget (500). What is the BEST move?

2. Priya has two debts: 4,000 at 18 percent and 300 at 9 percent. She wants to minimise total interest. Which method fits?

3. A 400 phone-case warranty is offered. Which statement is BEST?

What does a deductible do?

It is the amount you pay first before the insurer pays.

Why does compound interest grow faster?

Unpaid interest is added to the balance, so the next charge is on a larger amount.