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You might have a grip on your everyday finances, but what about when those emergencies strike? A big, unexpected expense can wreak havoc not just for your finances, but also your life in general. It’s not hard to see how much more difficult it would be if your car broke down and you couldn’t afford to fix or replace it, or your boiler broke and you’re not in a position to buy a replacement.
Managing these expenses is much easier when you have a sizable rainy day fund. With that, you can simply take the big expenses in your stride, without falling into financial difficulties.
Of course, knowing the importance of having a large rainy day fund and actually having one are two different things. In this post, we’ll run through some handy tips that’ll help to quickly and efficiently allocate more funds to your emergency bucket.
Auto-Saving
It would take a pretty responsible person to voluntarily put money into their emergency fund each month. If you struggle to save money, then your best bet is to take the manual component out of the process, and instead automate your savings. There are apps that’ll allocate funds to a savings account without you having to do anything, making it an effective saving strategy for people who historically struggle to save money. Since this is for a rainy day, you’ll need to choose a savings account that allows for instant access (some have thirty-day withdrawal timeframes, which won’t be useful if you need to quickly repair your car!).
Close Your Wallet For a Month
Want to add a lump sum to your rainy day fund, but don’t see all that much cash in your bank account? Then look at closing your wallet for a month. You’ll be amazed at how much you can save when you become a frugal spender for a few weeks. All the money that you might ordinarily spend on coffee, takeout food, and shopping trips can simply be diverted to your rainy day fund. This approach works because it doesn’t require a massive commitment — you can resort to your usual spending habits once the month is over. But actually, you’ll likely be so impressed with how much money you’ve saved that you’ll probably continue it for another month!
Uncover Untapped Money Sources
Even with all the motivation in the world, it can still be difficult to save money. After all, we all have those usual expenses that can have a negative impact on our bank balances. One smart way to build your rainy day fund without directing funds away from your usual account is to uncover untapped money sources. For example, if you’ve bought a car on finance in the past decade or so, then PCP Refunds might be a viable option. Equally, if you’ve been involved in an accident, then you could be eligible for compensation. Even your job might be an untapped money source; could you ask for a raise, for example? It’s much easier to add money to your rainy day fund when you have more money flowing into your accounts.
Start a Side Hustle
Another option is to consider starting a side hustle. If you can do that, then you can simply add all the money you make (or whatever percentage of the money that makes the most sense) to your rainy day fund. There’s no shortage of side hustles you can start; if you have a skill, for example, then you might consider offering tuition. Even a couple of classes a week could bring in enough money to quickly build your rainy day fund.
Cut Back On Unnecessary Expenses
If you’re like most people, then you probably have a lot of digital subscriptions. When you add up how much all of them are costing you, then you’ll probably find that they amount to more than a pretty penny! The question is, do you really need them all? It’s easy to fall into the trap of spending a small fortune on subscription services each month, but you’ll probably find that you can live without them just fine — and that you feel much better knowing that the money is instead being used to safeguard your future.
Stay Committed
Finally, remember that building a rainy day fund can take time and effort. You’ll need to make a commitment to saving money. If you can stay committed for 6 – 12 months, then you’ll absolutely reach your target, and in the process, you’ll be able to enjoy life all the more, secure in the knowledge that you’re safe whatever happens.
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