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!
I have to admit, years ago, there was a time in my life when I exhibited all 10 of these signs of financial struggles. It started right around the time my husband and I got married in 2006. We were spending, spending, spending – and we had no idea how bad of a situation we were getting ourselves into. Honestly, I don’t even know what we were spending on. We had multiple credit cards open and we were racking up the debt faster than we could pay it off!
In the beginning, we were only experiencing 1, or 2, or 3 of these signs, but before we knew it, we were experiencing almost every single one.
Does this sound familiar?
If this sounds like you, I want you to know, you are not alone and even reading this shows me that you are heading in the right direction. In order to resolve and take care of an issue, you need to acknowledge it. My hope is that you’ll see these signs and if you recognize them in yourself, you’ll make the decision to take action before things get too far along.
Here are 10 signs financial struggles might be creeping up on you:
You Don’t Know How Much You Owe
Credit cards, loans galore – it can be so overwhelming. Do you feel like there’s just so much, you decide to push it to the back of your mind and ignore it or pretend it’s not there? If that’s you, the financial struggle is real.
You’re Arguing with Your Partner About Money
When arguments continually center around money, finances, and spending – your financial struggles are a real problem.This arguing can start out small and escalate, especially if one person is a saver and the other is a spender. When both spouses aren’t on the same page about spending, it results in tension and, over time, this tension puts a strain on your relationship.
You Need to Use Credit Cards to Cover Expenses
You know you don’t have money in the bank but you’ve got a handy-dandy credit card in your pocket. So you buy now and pay for it later. This leads to rapidly racking up credit card debt. It’s time to really look at your finances if you always find yourself relying on your credit cards.
You’re Only Able to Make Minimum Payments
If you are only able to make the minimum monthly payments on your loans and bills, it is a sign that your finances might not be where you need them to be. When you have multiple credit cards and loans, those minimum payments add up and the balance never appears to get smaller due to interest.
You Frequently Make Late Payments and Overdraft Your Account
When you miss a payment or overdraft your account, you’ll get hit with loads of extra fees. No one wants additional fees – they really start to add up. And, mounting fees and charges will just add to your debt. If this happens to you frequently, it is definitely an underlying issue you’ll want to look at.
You Don’t Have a Savings or Emergency Fund
Emergencies happen, things break down, so it’s important to have a plan and some funds set aside for those unforeseen events and accidents. Without a savings or emergency fund, you’ll end up taking out more loans and using your credit cards. It can take a while to get to a place where you can set up a savings fund but the sooner you’re able to do this, the better off you’ll be.
You Find Yourself Borrowing from Family and Friends
When things are bad, you might feel like you have no other option than to rely on family and friends. Fortunately, this wasn’t a huge issue for us. If you rely on friends and family to bail you out, it is time to start establishing new financial habits to move towards financial security.
You’ve Requested an Increase on Credit Limits
Credit cards have limits to help us from not racking up more debt than we can payback. If you’ve hit that limit and you’re requesting more credit, that’s not a good sign. This goes hand-in-hand with opening up multiple credit cards. Or, have you found yourself getting creative with moving balances and debts from one place to another? If this is you, it might be time to take a good hard look at these habits.
You Have No Retirement Savings
This isn’t necessarily a sign you’re struggling, but it is something you want to start thinking about. I’m sure you don’t want to be working until you’re 80 or 90 – no one does! But if you are getting closer and closer to retirement age with no financial plan, you’re going to find yourself experiencing financial struggles. The later you start saving for retirement, the more difficult it will be to grow your funds into something you can live off of.
You’re Living Paycheck to Paycheck
If this is you – you get paid and you’re already relying on your next paycheck. If you’re in the vicious cycle of using your paycheck before it even hits your bank account, that is a really strong sign that you are struggling financially.
Take a step back, lay everything out, take a look at your situation, and be honest with yourself. Acknowledge and be aware of what is happening in your life and your finances. It is going to be okay. Now, let’s take some steps to move your family forward to a better financial space.
I’m holding a FREE live online Family Budget Planning Workshop at the end of August and I’d love to have you join me. Click here for all of the details so you can begin to manage and control your family without the overwhelm.
As a mom, there’s never just one job that you have to cover. It’s an endless barrage of task after task after task that can be overwhelming.
So, it makes sense if you can create a system that helps you feed two birds with one seed. Right?
What if you could help your kids with the following habits: doing chores, managing their money, and becoming more civic-minded by donating to charity? And it’s possible to do all of this with one system.
One System Can Teach Kids Three Healthy Habits?
Like a lot of parents, I’ve created a chore chart as a way of tracking if my kids do the things they’re supposed to for their weekly payment. This can be a combination of chores they’re expected to do as being part of the family such as brushing their teeth and cleaning up the sink after themselves to those that go above those expectations.
Each time they do a chore, they place a chore stick into their bin so I can track if they’ve done what they are supposed to. This means it makes them responsible for their own actions. I simply ask how their chores are coming and they have a tendency to self-regulate without me nagging them about getting their work done.
What makes this system great on multiple levels is that it accomplishes several things.
First, it builds healthy habits. No one is going to be standing over them when they get out on their own checking to see if they’ve done the dishes or swept the kitchen. They need to learn how to self-regulate and monitor their own behaviors. So, it’s important to teach these healthy habits at an earlier age before they get released into the real world.
Build Healthy Habits
It teaches them the importance of working for money. If they don’t do the chores, they don’t get paid. This instills in them that they have to earn what they get and not just have it handed to them. The amount of personal responsibility this gives them is amazing.
Earn Screen Time
Another thing it provides my kids is the ability to earn screen time. No one wants their child turning into a mindless zombie, but we also don’t want them completely shut out from the amazing technology that this generation is in love with.
My kids don’t get screen time during the school week. But they complete their chores in order to earn weekend screen time. This makes them appreciate earning their time and it also means they value the time that they do get.
Teaching the Healthy Money Habit
Now, every family is different, but in my house, we give our kids $10 a week for completing their chores. We have a bank system they use to keep track of their money. Each week, I give them the $10 and they have to decide how much they’re going to put into each of three “accounts”—spend, save, and give away.
The spend section is obvious—the amount of money they want to use right now to buy something like snacks or a small toy. The save account is where I teach them to delay gratification. Sure, they might want a really expensive item; but they have to learn to wait weeks or even months to earn enough money to buy it themselves. But the real difference is the “give” account—this is money they set aside to donate to charity. This instills in them a desire to help others. But it also gets them to see beyond themselves and donate to charities that they want to give to.
Best Part of the System is The Communication
I love being able to sit down with them and have them explain their thought process on how much to spend, save, and give. It allows me to check in and see how they are learning healthy money habits.