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Why You Should Be Saving

Life is full of surprises. Some good and others less so.

Often, even the nicest changes or opportunities come with some sort of hidden financial pressures.

You might be heading to work one day and someone bangs into your car, damaging it. It is an unplanned disaster and suddenly you need to pay insurance excess. But where does the money come from?

When life throws a sudden spanner in the works it is often helpful to have some funds already set aside to help overcome these challenges.

This is why it is a good idea to have a “rainy day” fund.

Saving For Rainy Days

It is hard enough to save anything at all these days.

Everything is so expensive that you may have little to set aside. And when thinking about how much to save for a rainy day it is also hard to know how much you should set as a target.

Some emergencies are small. Like getting a headache and having to head to the chemist to buy some pills. Others can be massive like being retrenched and not having any regular income.

This is why a rainy day fund should have as much as you can realistically set aside without having to skip on essentials. It’s no good saving towards an insurance excess if you have to stop paying for insurance to save.

‘Any rainy day savings are going to start small and build up over time’

Any rainy day savings are going to start small and build up over time. First, you will save a little and have enough for smaller unplanned emergencies. That’s great. Hopefully, over time you will eventually build up enough to help you cope with bigger challenges.

 

Tip: Did you know you can automate monthly transfers to your emergency fund so you can make consistent progress without having to think about it?

Keep Those Funds Separate

If you keep your rainy day savings mixed in with your regular monthly banking account you will quickly find you will spend the money.

It is much better to try and set the funds aside in a separate bank savings account or maybe a savings pocket.

This will also help you keep better track of how your savings are going.  It can be very nice to watch the balance slowly go up to something meaningful.

Emergencies are often sudden so; you want an account or service where you can withdraw money quickly without any penalties.

This is why savings pockets are often popular but a high-interest savings account or money market account can also be a good choice because they offer access while still earning decent interest.

Don't Stop Saving

Because emergencies come and go, your rainy day fund is going to fluctuate up and down too.

Sometimes months will have gone by without you using any of the money and it will start to add up and other times after an emergency it might not be looking so good.

‘These savings are there to be used’

That’s alright. These savings are there to be used. They are there to cushion you when things go wrong so that you do not have to rely on expensive credit or running to your family begging for some help

As time goes by, you may need to review how much you are setting aside each month.

Have you received an increase or changed jobs?

Could you save more?

Do you need to increase your saving target as life gets more complicated and more expensive?

Whatever the case, and no matter how often you have to raid your rainy day savings the trick is to just keep saving something big or small.

A rainy day fund can really help when life’s unexpected surprises come around