Saving for a rainy day and the unexpected
Oct 14, 2011, 8:45 a.m.
We all need a rainy day fund to cover life's unexpected incidents. Just as you're cruising along carefree, your transmission suddenly starts dripping fluid, or worse, your roof springs a leak. These things never happen at a convenient time; they seem to spring up when you just spent your bonus or paid your child's student loans. That's why it's important to have some cash tucked away to cover life's curveballs. Here are some tips to help you build your rainy day fund:
Set aside bonus cash. Anytime you receive extra money, put these funds aside in your rainy day account. It might come from a tax return, an inheritance, or inside a birthday card.Review your budget. Examine your discretionary spending, cable bill, phone bill, and other expenses to see where you can make adjustments. Any savings earned from these cuts can be deposited into your rainy day account.Start rounding up. Round up the dollar amounts in your checking account for each transaction. At the end of the month, review your statement and transfer the money earned to your rainy day fund. You'll be surprised how much money you accumulate from this small action!Set up an automatic deduction. Your bank can transfer a predetermined amount each month to your rainy day fund. It does not have to be a large amount; start with $25 and continue building.
There is an old adage that says six months of living expenses should be squirreled away in a savings account in case of an emergency. The same principle holds true with a rainy day fund. Implement some of these savings tips, and soon you'll have $3,000 to $10,000 cash readily available to cover those shocking incidentals that crop up.
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