Did you know that one in 10 of us don’t have any savings at all, and of those of us who do a third of us have less than £600?
It’s sobering stuff – especially as we emerge from coronavirus lockdown with the future so uncertain.
Of course keeping a rainy day fund is easier said than done, especially with the cost of living on the up (anyone else noticed how much more expensive the supermarket food shop seems to be recently?) and when you’ve got things like nursery fees to think about.
If you’d like the peace of mind of a rainy day fund but aren’t sure why or where to start in this collaborative post you’ll find 5 reasons everyone should keep a rainy day fund – and how to go about it.
5 reasons everyone should keep a rainy day fund
1. In case of emergencies
Unfortunately, financial emergencies always seem to happen when we least expect them. And if you don’t have anything set aside, you may find yourself stung by your lack of preparation, and paying for it for potentially years to come. From bills to unexpected expenses, even paying off debts (check out this website if you’re looking for debt advice and solutions) sometimes it can feel like there’s a constant drain on our finances, and it’s a race against time to get to payday again before your bank account runs dry. Having a strong rainy day fund will give you peace of mind that if anything does happen, you and your family are covered until things get back to normal again.
2. You might lose your job
Which could be a reality facing lots of us depending on how bad the predicted post coronavirus recession becomes. Losing your job is an unsettling time for everyone, however, if you have money set aside then you’ll be able to cushion your transition into a new job without struggling financially. When you have money in a rainy day fund, you’re less likely to turn to loans and credit cards to see you through your employment dry spell, which means less debt.
3. You might have a car emergency
Cars are expensive to run and maintain, and if you need them to get to work or to get the kids to school or nursery, then they’re a pricey necessity. If your car breaks down unexpectedly or you’re involved in an accident, having enough funds to cover the cost is essential.
4. To fund a house move
Whether you’re buying, selling or renting anyone who’s ever moved house before knows there are all sorts of hidden costs associated with moving home. Having a bit of money tucked away in a rainy day fund means you don’t have to worry if unexpected costs suddenly rear their head.
5. To turn dreams into reality
From learning a new skill like how to play the piano to going on the holiday of a life time, a rainy day fund built up over years can help turn a dream into reality without making a huge financial impact in the short term.
So how can I build a rainy day fund?
If you’re starting from scratch, the idea of building a rainy day fund can seem daunting. However, there are some simple ways to get started:
1. Sell your stuff
It’s the simplest way to make a little money, and declutter. Sell old books, clothes, accessories and even your old smartphone handsets for a little cash boost.
2. Gather all your change
Don’t sling those pounds and pennies away in the drawer, added together they could increase your rainy day fund a little more every day.
3. Recalculate your budget
The most efficient way to build a rainy day fund is by working out a budget, sticking to it and putting the savings away automatically with online banking apps.
4. Reduce your spending
Reducing your overall spending will ensure you have more money left over in your account to place in your emergency fund. And every little helps!
This is a collaborative post.