Be it a medical emergency, car repair, kitchen pipe bursting or high utility bill, financial surprises are rarely pleasant. It is during these times your rainy-day fund comes to the rescue.
Rainy day savings are like an umbrella safeguarding you from life’s inevitable rains. It acts as a financial buffer to cover random bills or expenses that you may not have accounted for in your monthly budget or expenses. This unpleasant surprise, if not prepared for, can lead to financial setbacks and ruin certain plans for your future. These expenses or bills usually end up being temporary, one-time expenses but still manage to uproot your otherwise financially sound, well-planned month into an utter mess. As the name implies, the fund is designed to weather minor inconveniences that life throws at you, so, having some money tucked away is always a good idea.
Here are some rainy-day savings strategies that will help you stay ahead of these imminent expenses. Do your bit and start saving for it as soon as today.
Assess your personal needs
Make a note of your total cash flow, financial goals, debt and financial dependents. Once you have a better picture of your financial standing, you can start working towards budgeting for a rainy day and allocate money towards it.
Automate your rainy-day savings
Once your salary gets credited, sock away a part of your salary towards savings funds. You can start small and keep the amount flexible based on your convenience. It can become a recurring practice by automating it through your bank application, which helps you save up consistently each month. Saving for a rainy-day fund should never stop; it should only be replenished. If it helped you get through a difficult situation in the past, it doesn’t mean another one won’t visit you in the future.
Make a list of forthcoming expenses
Be it tomorrow or a year from now, a rainy day is waiting to visit, so you may as well prepare for it well in advance with an adequate amount of liquid cash stowed away safely. In addition to car maintenance and house repairs, there could be unforeseeable circumstances, such as veterinary visits, servicing of household appliances that are no longer under warranty, dental check-ups and more.
Save your bonus
As tempting as it may be to spend all your bonus money, saving it for an emergency fund is the financially sound thing to do. While you can dedicate a portion of the money to celebrate or treat yourself to new things, the sooner you achieve your rainy-day goal, the sooner you can start focusing on saving up for future plans or investments, such as retirement or vacation.