A rainy-day fund may sound old-fashioned, but with what’s happening in the country right now, it’s probably something a lot of people wish they had.
And while now might not be the right time for you to start taking money out of your budget to sock away in a savings account, it may be a good time to sit down and figure out how you can start your rainy day fund when this is all over.
Basically, a rainy-day fund is having enough money in your savings to cover 3 to 6 months’ worth of living expenses. That means necessities like mortgage/rent payments, car payments, utility bills, food, credit card payments, and other bills you normally pay every month. So, for example, if your monthly expenses total $3,000, that means you’ll need to keep between $9,000 and $18,000 in a savings account to cover them in case of an emergency — like the one we’re experiencing right now.
Of course, most people can’t come up with that much money overnight. It’s a fund that you have to build up over time.
But where will all that extra money come from? Here are a few suggestions that might help: First, write down where all your money is going every week — even if it’s just for a pack of gum. Then look to see how much is spent on things you really need (a five-dollar cup of coffee isn’t a necessity). Now see if you can either cut out any frivolous spending or at least cut it back and take that money and use it to start your rainy-day fund. It may seem like nothing at first, but it can add up over time. Do the same with bigger purchases like clothes, entertainment, electronics (do you really need the latest version of that smart phone). Now take what you would spend on these items and add that to your fund as well. Another thing you can add is any extra cash left in your checking account at the end of the month.
We know that saving money isn’t the biggest thing on your mind right now. But we hope when this is all over, it will be. So, when the next rainy day comes, you’ll be ready for it — even if that rainy day lasts for weeks.