“Save for a rainy day” has been a phrase that’s been around a long time. And it applies just as much now as it did years ago.
That’s because it’s always a good practice to set aside money for unforeseen circumstances that crop up in life. A rainy day fund provides for financial as well as mental peace of mind because you know the money’s there in time of need.
Whether it’s a loss of employment, a medical ailment, an unplanned home repair or some other emergency, having a monetary cushion in place can help overcome unexpected obstacles. Experts advise having three months of savings available for such circumstances.
But even so, a recent survey by the Financial Industry Regulatory Authority (FINRA) revealed that only about 50 percent of Americans indicated they could have $2,000 available for an emergency in the next month. (FINRA is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly.)
If you’re among those who don’t have a rainy day fund, it’s never too late to start one. Here are some ways to do that:
Get a handle on your monthly bills. Knowing where you money is going is the first step to figuring out what you can afford to set aside for a rainy day fund. If you find yourself struggling to find a few extra bucks to save each month, then consider cutting some expenses, such as going out to dinner two or three times a week or buying lunch every workday.
Save your change. At the end of each day, place the coins in a piggy bank or another container and watch the money add up right before your eyes. Better yet, set aside unspent dollar bills (or even 5 dollar bills!) to build up your kitty even faster.
Turn unwanted items into cash. It could be anything from pieces of furniture to outgrown clothing. Take it to a consignment shop, hold a yard sale, or sell it online.
Ditch a costly habit. It could be cigarettes, or compulsive online shopping. The savings you could reap could be staggering.
If you get a raise at work, don’t spend it. Put it in a rainy day fund instead. And if you pay off a long-standing bill such as a car loan, still set aside at least a portion of that money each month for the fund, too.
Even if it takes several months to accomplish your goal, it will be worth it in the long run when an emergency arises.