War Chests and Emergency Funds: Why Households Must Think Like Institutions

This article was first published in the Economic Times, April 30, 2026

Periods of geopolitical tension have a way of reminding us how little control we really have. The ongoing conflict in the Middle East, involving Iran, the United States and Israel, is not just a distant headline. It has implications for oil prices, inflation, interest rates and financial markets across the world. For households, these shifts translate into something far more immediate: uncertainty in income, expenses and financial security.

In such moments, one principle becomes particularly relevant. Just as nations and institutions prepare for shocks, households must do the same.

Think Like Institutions: Build a War Chest- In my work with family offices, one idea I emphasise consistently is the importance of maintaining a “war chest”, a portion of wealth set aside in safe and liquid assets. This is not capital meant for growth or return optimisation. It is capital meant for survival, stability and optionality. It ensures that when disruption hits, decisions are not driven by panic.

The same logic applies, perhaps even more urgently, at the level of individual households. Financial resilience is not built in the middle of a crisis. It is built before one.

Your Emergency Fund Is Your First Line of Defence- At the level of the household, the equivalent of a war chest is an emergency fund. Its role is simple but critical. It protects your life when your income cannot.

It absorbs the shock, allows you to maintain continuity, meet obligations, and most importantly, think clearly about your next steps. The triggers may vary, a macroeconomic slowdown, job loss, health emergency, or a broader systemic event such as a pandemic or financial crisis. What unites these is their unpredictability and their ability to disrupt cash flows.

How Much Is Enough Depends on Your Reality- There is no single number that works for everyone, but there is a guiding principle. At a minimum, three to six months of essential expenses such as rent, food, utilities, healthcare and loan repayments should be non-negotiable. For those in volatile industries, with variable income streams, or with significant dependents, a longer buffer of twelve to twenty-four months is prudent.

This is where risk is often underestimated. Income is treated as stable until it is not. Entire sectors can slow down simultaneously. Hiring freezes, delayed payments and business contractions tend to cluster in times of stress.

The real question is simple: how long can you sustain yourself if your income stops tomorrow?

Safety and Liquidity Matter More Than Returns- Equally important is where this fund is held. An emergency fund is not an investment strategy. It is a protection strategy. The purpose of this capital is not to grow, but to be available when needed, without loss of value. In periods of stress, liquidity becomes more valuable than return.

Funds locked in real estate, equities, or long-term instruments defeat this purpose. Instead, this reserve should be held in low-risk, highly liquid options such as savings accounts, liquid mutual funds, or short-duration deposits.

There is also a behavioural dimension. Without a buffer, households are forced into unfavourable choices, selling long-term investments at the wrong time, taking on expensive debt, or cutting back on essential spending. With a buffer, decisions become measured rather than reactive. Time, in a crisis, is an asset. Liquidity buys that time.

Conclusion

The current global environment is a reminder that volatility is not an exception. It is a recurring feature of economic life. While we cannot control geopolitical events or macroeconomic cycles, we can control how prepared we are for them.

A war chest does not eliminate uncertainty. But it ensures that uncertainty does not dictate your choices. Because when disruption arrives, as it inevitably will, the difference is not in the event itself. It is in how prepared you are to face it.

Next Gen, Family Office, and Fear of the Unknown

This article was first published by Forbes India on February 28, 2025; https://www.forbesindia.com/article/leadership/next-gen-family-office-and-fear-of-the-unknown/95434/1

Every generation believes it knows what is best for the next. Parents worry when their children make choices different from their own. In business families, this gets amplified. Today, as many heirs to business legacies choose to manage family offices rather than directly running traditional businesses, a familiar skepticism has emerged.

There are murmurs that the next generation is taking the easy way out—that instead of building businesses, they are choosing to invest, trade, and manage wealth. The assumption is that real work only happens on the factory floor, in corporate boardrooms, or while scaling tangible businesses.

Is this right? Or is it simply resistance to the unknown—a pattern we have seen before, only to later recognize its value?

Resistance to change

The doubts surrounding family offices today echo past resistance to changes in business. Ecommerce faced pushback; many were convinced customers would never trade traditional retail for online shopping. Within organizations, a transition to professional management over family-run decision-making was seen as a betrayal of legacy. 

Some of today’s most celebrated successes were once dismissed. Motorcycles were deemed unsafe, the Indian Premier League (IPL) was seen as a gimmick, and the iPhone was mocked for lacking a keyboard. Netflix, Tesla, and Airbnb all faced early predictions of failure—until they redefined their industries.

This is not to say that every change is automatically good—but simply that new paths deserve a chance before they are dismissed. The fear of the unknown often masks the potential for progress. Could family offices be at a similar inflection point. Is it a reimagining of the responsibility by the next gen, not necessarily a retreat?

Evolution of the family office

There was a time when family wealth was managed informally — invested back into the core business, parked in land, or lent within networks. Often, these investments lacked structure, transparency, and accountability, leading to disputes that stretched across generations.

Now family offices offer an alternative—one that is structured, professional, and forward-looking. While still in their nascent stages in India, globally family offices have evolved into far more than mere investment arms. They act as custodians of family legacy, ensuring values, vision, and governance structures remain intact. They manage philanthropy strategically, channeling wealth into long-term social impact initiatives. They handle legal and compliance matters, protecting assets from unnecessary disputes and liabilities. And they support entrepreneurship, funding both family-led and external ventures.

If done well, a family office does not just preserve wealth, it deploys it in ways that drive growth and impact.

Many next-gen leaders are making bold, strategic moves—modernizing businesses, investing in new industries, and ensuring their families’ wealth is managed effectively. They are not just preserving assets but deploying them intelligently.

It is easy to highlight the handful who take the easy route. It is also necessary to acknowledge those who are shaping industries, embracing technology, and driving change. The real question is not whether heirs run factories or manage investments, it is whether they are creating value.

Not us vs them

The debate is often framed as a generational divide, as if the senior and next generations are on opposing sides, locked in a battle of tradition versus change. But this is not about us vs them, it is about "us."

When the next generation succeeds, the entire family, the business, and the economy benefit. Their success ensures that wealth is not just preserved but strategically deployed, that businesses evolve rather than stagnate, and that the legacy of previous generations grows stronger.

And if they stumble? It is not failure—it is an opportunity to learn, adapt, and try again. Every generation has faced setbacks and found ways to rise stronger. The next generation must be given the same space to experiment, fail, and grow.

The senior generation’s role is not to resist change but to guide it wisely. Every great business family has adapted, whether by shifting from manufacturing to services, expanding from local to global markets, or transitioning from family-run operations to professional management.

Every new idea faces resistance before acceptance. Family offices may be misunderstood, or seen as the easy way out, but with the right support, they can drive economic growth, governance, and impact.

Rather than viewing the next generation as avoiding responsibility, can we see them as redefining it? Instead of dismissing them, let’s engage, mentor, and collaborate—because business is not about holding on to the past, but building the future.

I speak FOR family businesses. Remember Shah Rukh Khan in Chak De! India (2007)?

"Mujhe states ke naam na sunai dete hain na dikhaai dete hain… sirf ek mulk ka naam sunai deta hai—India."

(I don’t hear the names of individual states, I only hear the name of one country—India.)

Let’s not hear senior generation vs. the next generation, or traditional businesses vs. family offices. Let’s hear the echo of shared goals, continuity, success, and responsible stewardship of wealth.