Saving For a Rainy Day

umbrellaWhy Everyone Should Have Savings For a Rainy Day

People find saving money for a rainy day one of the most difficult tasks to do. If you are one of those people, take heart, there is still hope. It is much easier to take on this responsibility than you think. It does take a discipline, but with practice, you can build a rainy day savings account quickly. How fast a savings account grows is highly dependent on how determined you are to make it grow.

Why Save Money for a Rainy Day?

Rainy day money is for emergency purposes. Whether you need a new clothes washer or a tire goes flat, rainy day money will keep you from going into further debt. If you have money set aside for emergencies, charge cards or credit cards do not have to be used. That is a savings in itself because there will be no finance charges to pay. You will not have to use money from one bill to get repairs or replacements. This is a popular habit to get into. It is not wise to handle money this way though. Borrowing money from Peter to pay Paul has never been a good idea. That type of financial attitude leads thousands of people towards bankruptcy court every year.

Most people tend to put off starting a savings account for a rainy day. That is a bad mistake, as they later find out. Those who are wise enough to start a rainy day savings have fewer worries than those who do not. The point is, when you have a rainy day savings account, you are protecting yourself from future mishaps. Something goes wrong in everyone’s lives so everyone needs to have a savings account to cover those moments. It is like having your own insurance policy for the future, but the payments go to your account, not to an insurance company.

How to Save Money for a Rainy Day

In order to save properly, you should establish an amount to set aside out of your paycheck each week for the rainy day bank account. There are two options to do so. You can either take a percentage of each paycheck to save or to give yourself a set amount of money that will be put into the bank account from each pay. This money should be treated just as though it were a bill that had to be paid. It is just as important to have a rainy day fund, as it is to pay the electric bill or buy food every week. The average percentage people put aside for a savings account is 10%. Use this is a base. You can go higher or lower depending on your specific needs. If you choose a set amount per paycheck, at least $50 should be earmarked for this purpose.

The most reliable way to save is for it to happen automatically. As soon as a paycheck is in your account the savings should be automatically transfered to your savings account. That way you don’t have to do it or think about it, it just happens. Before you know it the amount in your savings account will start to grow.

When do you withdraw money from a rainy day savings account?

The money in the rainy day fund is for emergencies and should only be used for such. What constitutes an emergency? An emergency is anything that is necessary that needs either replaced or repaired. It is not an emergency if your MP3 player breaks; it is an emergency if the refrigerator breaks down though. This money should only be used for things that are necessary in order to survive. Remember that anything can happen at any given time. Using the money for non-emergency situations could leave you in a rut if something bad happens. For instance, if you lose your job, the rainy day fund can help you pay the bills until you find another job. If you use the money for things like replacing a music player, you will be in big trouble if the time comes that you cannot pay your bills after losing a job.

Rainy day savings accounts are considered by many to be essential. It is important to use your money intelligently to get the most out of it. The choice is yours, but most people enjoy having the security of a rainy day fund. It allows you to have greater peace of mind.

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