How To Build A Rainy Day Fund
A rainy-day fund is an important source of money during hard times. As a type of emergency fund, a rainy-day fund is money that you set aside in hopes of never using it. During times of hardship when you have unexpected expenses and no other savings to pay for them, you can use a rainy-day fund to pay off the bill. It may cover costs due to car or home repairs, unexpected bills, or the loss of a job. A rainy-day fund provides a safety net for you and your family so you won't have to worry about how to pay for unforeseen costs. According to data provided by Finder Research, roughly 40% of those living in Australia have savings of only 1 month or less built up.
If they lost their job, they would only be able to survive with their current income for a short time! Since most people will face unexpected costs at some point and don't have enough savings for even a month of living expenses, it's important to have money set aside in a rainy-day account. Even if you don't anticipate using it, most people are eventually faced with unplanned costs. How to Start Your Fund When beginning a rainy-day fund, it's important to start early. Even if you can't contribute much, start today and continue to build your savings. The more you're able to save, the more you'll be prepared when disaster strikes. If you're able to set aside $20 a week, you'll have a savings fund of over $1000 after a year. Even though it might not cover all your expenses, it's a great start and gives you room for small, unexpected costs. Oracle Financial Planning Newcastle and their team can guide you to begin to build your rainy-day fund. Why Build a Rainy Day Fund? Life often leads to unexpected costs. You may find that the Covid-19 pandemic has led more people to require a rainy-day fund than ever before. A rainy-day fund should be part of any solid financial plan, as it allows for you to cover unforeseen expenses. How Much Should I Have? For most people, a minimum of $1000 is appropriate for a rainy-day fund. However, when it comes to emergency savings, the more the better. When you're deciding how much you need in your rainy-day fund, you need to anticipate some long-term expenses you might have.
Thinking about future costs will help you figure out the amount you need. For example, if you own an aging pet, kids who need braces, or a dying air conditioner, you may need more than someone who doesn't anticipate this number of expenses. When saving, make sure you consider how long it will take you. If you have a goal of $2000 and are able to save $75 each month, it will take you around 27 months to reach this amount. Contact Oracle Financial Planning Newcastle to plan your rainy-day fund today.
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