How to Build a Rainy Day Fund

A rainy day fund is money you’ve put away for emergencies, unexpected bills and accidents, or those “What If” moments. A lot of people don’t have an emergency account or don’t know how to start one. I know it can seem like an overwhelming task, so here are some tips to help you save for a rainy day in a positive way.

Tip 1: Start Small

An emergency fund does not have to be built in a day. It is better to have a foundation to build on than have nothing at all.

• It’s perfectly fine to start with a small amount of money.
• Open a bank savings account or even a savings jar at home.
• Transfer a few dollars a week or a percentage of your paycheck on payday to help build a savings habit.
• If you choose a bank account, the interest earned from your funds will help your money grow!

Tip 2: Keep Money Separate

It may be tempting to keep a savings account on the side and then borrow from it to pay regular bills. But doing that makes it almost impossible to grow your emergency fund.

• Keep your rainy day money in a separate account from your regular funds.
• Separate funds make it harder to accidentally, or purposefully, spend the money.
• This will help you perceive your rainy day funds as inaccessible, except for emergencies.

Tip 3: Create an Achievable Goal

Growing an emergency fund is not meant to stress you out. Actually, it’s supposed to help you when financial surprises pop up! So, try to make this financial goal positive and reachable.

• Set short-term savings objectives to stay motivated.
• Example: $100 for unexpected minor expenses.
• Example: $300 for more expensive situations.
• Stay in the savings habit by continuing to assess goals and build up your funds.

Tip 4: Save the “Extra”

Even though we no longer get Tooth Fairy money, there are times when “extra” funds can be found. Give that money a purpose and add it to your rainy day fund without it affecting your budget.

• Expecting a tax refund this year? You could deposit it directly into an emergency account.
• Holiday gift money or work bonuses could help build a rainy day fund foundation.
• Money found in clothes or coats, or around the home can be put toward your fund.
• Shopping returns or refunds can be reallocated to your emergency savings account.

Tip 5: Cutback, Just a Bit

Now this may be a little more advanced, but it’s achievable and you can even work up to this goal if it’s too much right now. Temporarily cutting back on one or two non-essentials could give your funds a nice boost.

• If you eat at restaurants or get food delivery a lot, cut one or two services out a week. The savings will add up.
• Plan your meals and shop grocery sales, then save the difference.
• Pause a streaming service or subscription, then put the money into your emergency account.

Today Is a Good Day to Save

The goal isn’t to restrict your life so it’s boring or deprived. A rainy day fund is there to help lessen the financial and emotional stress when life happens. By slowly growing an emergency fund, you can set money aside without having to readjust your everyday lifestyle. Even a small amount of money in a fund can be meaningful! So why not start today?