You may be thinking, why even have a rainy day fund?
Well, have you ever heard of Murphy’s Law? If you haven’t, it states: anything that can go wrong, will go wrong. Let’s face it, the more you are unprepared for something, the more likely, it seems, it is to happen. There’s always something. Maybe your car breaks down, maybe something needs fixing in your home, or maybe your kid gets injured. The more you are prepared for emergencies with a rainy day fund, the better off you are.
The recommended amount to have in your emergency fund is three to six months worth of expenses. Some experts are even saying 12 months, which I get, especially with what’s going on in our world right now. The more you have saved up the more wiggle room you have to get through these trying times.
My husband and I have six months of expenses saved up. But, it wasn’t always that way for us. We used to have zero saved. But, we started out with small goals. Our first goal was to just save a thousand dollars. Once we hit that first goal, we bumped it up a bit because we knew we ultimately wanted to have at least three months. Once we got to three months, we felt secure and reassured and we were comfortable for a bit. But eventually we decided to try saving up six months worth of expenses. I’m the type of person who wants to be extra prepared and have that extra safety net for our family.
Now, don’t get overwhelmed, it didn’t happen overnight. It took years and years of saving, but we started off small and so can you! Just think, have you ever heard the phrase: How do you eat an Elephant? One bite at a time. It’s the same thing with building up an emergency fund or rainy day fund.
Here are some ideas that you can incorporate right now into your day-to-day life to build up your rainy day fund:
Automatically take a portion off of each paycheck.
Have a specific amount of money automatically deducted from your pay and put into a savings account. Out of sight, out of mind. The key here is to make it automatic, so you don’t even have to think about it. That way, you aren’t tempted to touch it.
Keep the Change Saving Programs.
Many banks, like Bank of America have programs where, when you spend, they will round up to the nearest dollar and automatically put the remainder into a savings account. If your bank offers this type of program, enroll in it! It’s another thing you can do to save without even thinking about it. It might seem small, but over time you’ll start to see it grow.
Sometimes, you might be trying to change a habit. Maybe it’s a swear jar, but you can do this for any habit you or your kids might want to change. Whenever you do that thing, you add a specific amount of money to your jar. You can get the kids involved and they will really stay on top of you to let you know when you need to add money to the jar. It almost becomes like a game.
When eating out or buying a treat, put a certain amount aside.
So, every time you go out for ice cream, a coffee, or out to dinner, add a set or predetermined amount to that fund or money jar. Make sure to do it every time. If you have the money to go out for a treat, you have an extra dollar to put into your fund.
Take a portion of a bonus or refund check and put it aside.
I know a lot of people get so excited when they get their bonus or refund check. That’s fine, but before you spend it all, take a portion off the top and put it into your rainy day fund. You can still splurge or treat yourself, but be sure to save some, too.
Whatever you come up with to do to save for your rainy day fund, get the whole family involved. Write it out and make it a family affair. Include your kids and make it fun. Remember to be consistent. It might seem small at the start but over time things will add up. Be careful not to dip into your fund until there is an actual emergency (and buying a cute pair of shoes on sale is definitely not an emergency).
Can you use help getting your rainy day fund set up? Book a FREE 15 min call with me to find out how I can help you with your budget plan. To schedule your call, click here!
Back in 2008, my husband and I were young, naive, and nearly 100K in debt. Two years into our marriage, we found ourselves living paycheck to paycheck and barely making ends meet. We had no emergency fund to fall back on and we had no clue how bad our spending habits had gotten.⠀
We got ourselves into a huge mess and we didn’t know how to get out of it.⠀⠀
Many families are going through unprecedented and unexpected financial difficulties right now. With most states issuing shelter in place orders and businesses closing aside for essential personnel, we’re seeing a spike in unemployment like never before. Many people who never imagined and never planned for losing their jobs are now finding themselves unemployed and unsure of where to go from here. ⠀
Is There a Lesson to Learn from Being in Debt?
Believe it or not, waking up to only $10 in the bank was a blessing in disguise for us. It taught us a lot more than we ever expected.⠀⠀
We had to really dig deep and ask ourselves if the kind of life we were leading was the kind of life we wanted our kids to grow up in. Only then were we able to make some changes that have lead to us living the debt free life we now enjoy.
What Happens When you aren’t Financially Prepared for a Crisis?
A crisis can take many different forms. It might be an unexpected medical expense, a totaled car that you still owe on, a house fire, or an unexpected layoff. It could also be a global pandemic that cripples the entire nation leading to a complete financial crisis. If I’d said that last one a few months ago, I bet you’d have looked at me like I had three heads – but here we are.
Needless to say, our current situation was not anything anyone was expecting. And, it’s hard to prepare for something that you can’t even dream up in your worst nightmare. But, when we aren’t prepared for a crisis, that is when we are most vulnerable .
If you have been caught off guard in this crisis without an emergency fund, you can use this time to really evaluate and reprioritize your family goals. It may not feel like it right now but maybe it is also your family’s blessing in disguise.⠀
How Can I Get a Budget in Place Quickly?
If you’ve found yourself in a tough spot financially for the first (or maybe, second, or third) time in your adult life, it’s not too late to take action. Don’t throw in the towel. With a little hard work, some tough decisions, and some smart budgeting, you can get yourself out of this mess.
But, the first thing you’ll have to do is let go of blame. You can’t begin to make the necessary changes in your habits if you are holding onto blame – of yourself or others. Then you’ll need to establish a reliable budget and to stick to it.
Here are some simple budgeting tips:
You need to know exactly how much money comes in each month and how much goes out.
Develop a system or process to pay down your debt.
Begin to spend within your means.
Add to your savings each month.
Following these simple steps will help you prepare for the next crisis.
How Can We Prepare Financially for a Future Crisis?
Please believe me, having your finances in order and being prepared for a financial crisis does not make you a DoomsDay Prepper.
The number one thing to do to prepare for a future crisis is to begin saving money in an emergency fund. Open a savings account and begin to add to it each month. Look into accounts with the best perks, like higher interest rates and lower fees.
Start small if you need to. Make sure that you are working to build it up each month and only taking from it in the case of an actual true crisis.
I Can Help You Out
Having been where you are now, I know the range of emotions you’re going through. I know I never want to be back in the place and I don’t want you to be either. That’s why I’ve made it my goal to help others take control of their financial situation through budgeting.
If you’d like budgeting support, let’s chat about 1:1 coaching! I’ll help you set up a systems that will work for your unique family. Info here! Get your info here!