It’s not a matter of if, it’s a matter of when. If you own a home the chances are high that you will experience unexpected expenses. That could include damages due to weather, water, wear and tear, or any other number of circumstances. You don’t want to be left wondering how you will pay for repairs or maintenance or have to borrow to cover costs. Setting up and maintaining a rainy-day savings fund will help you feel secure in knowing you will be ready should the need arise. Here are some helpful tips and tidbits to get you started.
What is a “Rainy-Day” Fund?
A rainy-day fund is a savings fund set aside with money for unforeseen expenses.
Rainy-Day Fund vs. Emergency Fund
Rainy-day funds and emergency funds are often referred to as the same thing. However, financial planners would suggest having two separate funds.
- A rainy-day fund is for smaller unexpected or occasional expenses. These might include home maintenance, car repairs, or medical bills. This fund is also useful for anticipated expenses you know may be coming up soon. It is used to help avoid debt for minor inconveniences that arise.
- Emergency funds are typically established for more serious events that are harder to anticipate and may greatly upend finances. That might include loss of a job, a change in relationship, medical emergencies, going back to school, or other such life events. It is recommended that this fund have savings of three to six months’ worth of essential living expenses.
- To get started, it is recommended that you set up separate savings funds for each account you want to have. Most likely you want accounts you have quick access to. There are different types of savings accounts out there that can help you easily accomplish this goal. Some people like to look into accounts that may offer better investment opportunities. A simple call to your bank or search online can help you get started.
- Get in the habit of putting money into your accounts monthly, even if it’s just a few dollars. Setting up automatic deductions is one easy way of doing that without much hassle.
- If money is tight and you’re worried you don’t have the money to spare, there are some ways you can cut costs. Start by looking at your monthly expenses and creating a budget. Look at where you may be able to cut back. Use coupons, deals, and discounts on a regular basis. Switch to a television streaming service or opt for a lower cost cable package. You can also look at opportunities to earn a little bit more money. Online there are lots of ideas ranging from babysitting to becoming a driver. Go through the items in your home and see what you might be able to sell. For more great ideas and insight check out our links below under additional resources and references.
Life is full of twists and turns. Being financially prepared for emergencies will give you some rest and assurance along the way. If your rainy-day funds aren’t in place yet, start today. Even having a small amount tucked away will help. Make the goal to get your funds in place as soon as possible. It may take some work and sacrifice, but if an emergency arises, you’ll be glad you did it.
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