How many times have we heard “If it’s not broke, don’t fix it”? Unfortunately, things always seem to break—and at the most inopportune times! Whether it’s unexpected home repairs or a car that needs something replaced, unplanned expenditures can cause real problems.
Creating a rainy-day fund can help take the panic out of unplanned financial burdens. Bankrate.com recommends targeting $1,000-5,000 for a rainy day fund to help cover unforeseen expenses.
For cash-strapped families living paycheck to paycheck, saving for a rainy day can seem like something much easier said than done. But there are simple, painless steps you can take today to build an important financial cushion for you and your family in the future.
Open a savings account: Specifically a low- or no-fee option. Many banks offer savings accounts at no charge with a low minimum balance. You can have a portion of your paycheck diverted via direct deposit and grow a rainy-day fund without any noticeable change in your lifestyle. A mere $20 a week for a year puts $1,000 in reserve!
Bank your windfalls: Get a negligible raise or bonus? A small refund on your income tax? Put all or part of it in the bank. Finally pay off your car or credit card? You’re already used to paying that amount each month, so start depositing it into your savings account instead!
Cut back on lattes and lunches out: Everyone looks forward to a caffeine pick-me-up or a leisurely lunch with friends or co-workers, but they can be surprisingly expensive. Cutting out just one trip to the coffee shop and one lunch each week could save you up to $20. That adds up to $1,000 over the course of a year—venti expensive!
Clean out those closets: Chances are there are items gathering dust in your home you can easily sell. So whether it’s that size-too-small cocktail dress with the tags you bought on a whim or the super-hero memorabilia you no longer collect, turn those bad purchases into good money on eBay or at a consignment shop.
Check your “fixed” monthly expenses: We often ignore the fine print on our monthly bills, but there are ways to cut costs there, too. Are there expensive cable channels you are paying for but don’t watch? Have you shopped for a better deal on your car insurance lately? Do you really need the premium gym or tanning salon membership? These expenses are easy to overlook because we are used to them, but a few phone calls could save you between $50-100 each month—and that’s money you could easily put into savings.
The bottom line?: Putting money back for emergencies may seem tough, but if you look for simple ways to save, you can easily establish a rainy-day fund.