Rainy day funds are small collections of savings that help you pay for unexpected expenses that don’t fit in your budget. So, when one of your kids chips a tooth and needs to go to the dentist,or when the family dog gets sick and needs to be rushed to the vet, you’ll be ready to pay.
Read ahead to find out why your family should have one of these funds.
What’s So Great about It?
A rainy day fund is great for a few reasons. It allows you to handle an important cost without disrupting your monthly budget. Using it won’t affect your ability to grab groceries for the week or pay your upcoming bills.
The funds aren’t borrowed, so you don’t have to worry about repayments. The only type of repayment that you will have to consider is refilling the fund after you’ve emptied it so that you can handle other small emergencies in the future.
It’s also easily accessible. You don’t have to jump through hoops to reach the funds you’ve collected, whether you’ve stashed them in a paper envelope or a savings account.You can pay right away.
What Can You Do in an Emergency If You Don’t Have This Fund?
You have a couple of options. You could put the expense on your credit card. This move won’t affect your budget right away, but you will have to consider paying the transaction off later on.
What if you don’t have enough room on your credit card? If you don’t have enough available credit on your card, you could apply for personal loans in Illinois to help you manage an emergency payment quickly. Similar to a credit card, you can use this solution without affecting your budget right away and then handle repayments later on.
Remember that you should only apply for these loans in Illinois to help you with small emergencies that a rainy day fund would normally cover. It’s not for everyday expenses.
How Can You Get Started on a Rainy Day Fund?
Look at Your Budget
The first thing that you should do is look at your budget to see how much you can save every month and put in the fund. Don’t have a budget? You should download one of the top budgeting apps out there and get started on one now. It will really help you organize your finances.
Get More Savings
If you think the amount that you can add to your rainy day fund is too low, then you should see which one of your variable expenses can be trimmed down. This will stretch your savings so that you can bulk up your rainy day fund faster.
Here are some ways that you can do this:
- Use coupons and discount codes when you shop
- Drive less and walk more
- Cancel your gym membership and exercise at home
- Skip the takeout and cook more often
The best thing that you can do for your rainy day fund is to make a habit out of building it. Add those savings every single month and watch it grow. Soon enough, your household will collect enough to handle any small emergency without going into a panic.
With the help of a rainy day fund, you can recover quickly from an unexpected expense. All you have to do is dip into the fund, make the payment and move on.