A Financial Cushion is a reserve of money or assets kept aside to handle unexpected expenses or financial emergencies.
A Financial Cushion acts as a safety net, helping individuals or businesses manage sudden financial shocks such as job loss, medical emergencies, or income disruptions.
It usually consists of cash, savings accounts, or liquid investments that can be accessed quickly without significant loss.
👉 Typically 3 to 6 months of expenses for individuals
"An individual keeps ₹2 lakh in a savings account to cover 4 months of expenses—this is a financial cushion."