Having savings set aside for any emergency (big or small) is the simplest way to get ahead financially.
A “rainy day fund” can be used for many reasons:
An unexpected expense, such as a car repair that your insurance won’t cover or the need to replace a small household item
An expense that you know is upcoming, but you udon’t know exactly when (i.e you know you need new tires this year, but don’t know when)
Allows us to avoid putting unexpected expenses on your credit card or having to ask a friend or family member for money.
To help us feel less stress or anxiety
Even a small credit card balance can tempt you to build up additional debt, and having to borrow money can make you feel bad about your financial situation, which (as you know now) can lead to further money mis-steps.
We recommend setting aside a minimum of one month’s expenses in a Rainy Day Fund! On average, this runs from between $2,000 - $5,000.
It should be saved in a dedicated savings account that is quickly accessible with an immediate transfer to your checking account if needed. Most dedicate or open a savings account with the same bank they have their checking account so they can be easily connected!
Let’s either dedicate an existing savings account, or open a new savings account to start your Rainy Day Fund!
Identify if you need to open a savings account or use an existing one
Do you have a savings account open within the same bank your checking account is?
If yes, move on to Step 3.
If no, move on to Step 2.
Open the savings account! You can neither login to your existing bank and open a savings account that way. Or, give you existing bank a call and have someone help you!
Make sure the savings account you open is connected to your checking account and does not require any minimums or have any fees!
And their you have it! You can speak with your coach about setting up auto-transfers for savings, or if you should keep your contributions manual.
Was this exercise helpful in setting up your rainy day fund? Let your coach know what account you created, and add it to your dashboard!
Do you have further questions about rainy day funds? If so, ask your coach!