You’re on top of your monthly payments, you are steadily paying down your debt and you (usually) stick to your weekly household budget. So why keep a rainy day fund when your spending and saving is under control? Whether you call it an emergency fund, safety net or a rainy day fund, this special reserve of savings can help you on your way to achieving financial independence and flexibility. Keep reading to learn why creating a rainy day fund is a smart move, tips for sticking with it and how to save.
Be prepared for what comes your way.
Saving up for a rainy day can help you prepare for the unexpected. If you were to need urgent repairs done on your car or had to provide temporary care for a loved one, knowing that you had access to money outside of your primary savings and retirement accounts would probably offer some comfort and peace of mind. A rainy day fund can also help you cover exciting opportunities to travel, take advantage of unique experiences and make purchases you might otherwise have to turn down.
Consider keeping your rainy day account separate.
It’s one thing to build a buffer into your savings account, knowing in the back of your mind that a certain sum is untouchable until you truly need it. But much like that last slice of birthday cake left on the kitchen counter, your rainy day fund might not be around for long if it’s left in plain sight. It only takes one glance into your primary account to spot your rainy day savings and talk yourself into spending it. Keeping your rainy day fund out of sight is a good way to make sure it’s there when you really need it.
If you’re concerned about pulling a large sum out of savings, rest assured that you can start small when establishing a rainy day account. At Union Savings Bank, you can start with a savings account balance of $100.00 and contribute to it when you’re able, which brings us to the next tip.
Save on your own terms.
If you decide to keep your rainy day fund separate from your primary account, you have more flexibility in how you contribute to it. You can choose to make manual transfers when you’re able or you can opt for automatic transfers of a few dollars per month from checking. If you receive a bonus, consider adding a portion of it to this account and send the rest into your primary savings.
A rainy day fund shouldn’t take the place of your regular savings plan. Rather it can serve as a safety net should something unexpected arise or an opportunity present itself that you simply can’t pass up. After starting a savings plan and setting your goals, you can begin saving toward that rainy day. Visit our FutureTrack blog for more savings tips, then schedule your complimentary goal planning session.