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Creating a Rainy Day Fund

How many times have you found yourself in a situation where a major expense creeps up on you and you simply don’t have the means to pay for it? Expensive trips to the dentist, car repairs, and home repairs are just some of the problems that can put you in debt if you’re not prepared for them. That’s why you need a rainy day fund. Financial experts agree that’s important to have about $1,000 or 2-3 paychecks worth of money saved up for emergencies, but it’s up to you to decide how much you can afford to put away. Life is bound to throw emergencies at you, why not be prepared for them with a rainy day fund? Here are some tips for creating your rainy day fund:

Tips for Your Rainy Day Fund

• Add to your fund with each paycheck you receive. The amount you take from your paycheck really depends on how much you earn, but shoot for something around 5-10% of each check. Once you get closer to your goal, you can reduce the amount you’re adding to the fund.
• Put your emergency money in a savings account that you can easily access when needed. Even though you might earn more over time by investing your money in a fund or CD, it’s not really practical in this situation. You never know when you’re going to need that money so it’s best to put in a savings or checking account.
• Don’t leave your emergency fund in your house, piggybank, safe, or otherwise. Your fund will eventually reach hundreds of dollars and you don’t want to risk that money being stolen or damaged - just another reason why you’re better off letting a bank handle your money.
• If you find yourself coming into a large amount of money that you don’t need to use immediately, like a bonus at work or the upcoming tax rebates, put at least half of it in the fund. It’s all extra money so you won’t miss it as much as you would if it came from your paycheck.
• Your rainy day fund is meant for emergencies or major unexpected expenses. It should only be used if you absolutely cannot pay for something, so keep separate funds for vacation or shopping money.
  Title: Creating a Rainy Day Fund

Related:

• Saving Money For A Rainy Day
• Where to Hang Your Rainy Day Fund to Dry