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Do You Have a Rainy Day Fund?

Do You Have a Rainy Day Fund?

July 26, 2017

When the content of the article was beginning to take shape, heavy rain poured outside, thunder rumbled in the distance, and flash flood warnings were on the news. Consequently, the irony provided inspiration for the title "Do You Have a Rainy Day Fund?"

Let's face it. It's inevitable. As we all travel through this journey called life, a variety of unexpected events and circumstances will be encountered. Loss of a job. Kid needs braces. Refrigerator dies. Transmission quits. Fill in the blank_______________ . 

That is why it is important to have an emergency or "rainy day fund". At our office, instead of viewing these savings as something to bail us out during tough times, we like to think of them as financial umbrellas to help us weather the storms.

The common question is "How much should I set aside?" Honestly, there is no correct answer. But statistics show if 6 months of living expenses have been stored for the future you have put yourself in a pretty good place. This idea may seem daunting but it's not as bad as it sounds.

The first step is to sit down and take a look at your budget and determine how much it would take to survive for 6 months. If you don't have  budget, this would be a great opportunity to create one.

Next, make a plan and start saving on a monthly basis to build this fund. We recommend using a bank account specifically designated for this purpose. Research shows that when folks comingle their funds earmarked for unexpected events with money used for every day activity the "rainy day funds" seem to evaporate.

Last, carve out as much as you can for this objective and don't get discouraged. Start where you are and do what you can. Remember, Rome wasn't built in a day. But, once you achieve your goal you will enjoy the comfort that taking this important step provides.