Saving for a Rainy Day
Ideally, we all have something stashed away, for emergencies. A minimum of three to six months of budgeted living expenses, is suggested.
Not always easy to do, given the number of people living paycheck to paycheck. Finding a way to save, may save you from financial hardship in the future, and can only pay off in the end.
Think of your rainy-day savings money as insurance. The twist is that you are paying the premiums to yourself. With other types of insurance, someone else is getting your premiums, and if you never need to use that insurance, you don’t get your money back. However, when stashing cash in your rainy-day fund, it is all yours! You have it put away for an emergency, and if that emergency never happens, you have built yourself a nice little nest egg.
So, as the money adds up, how do you keep from the temptation of dipping into it for recreational or reckless use? Again, I say set it and forget it. If you have the ability, I suggest a direct deposit into an account that you do not have ATM access to. One way to do that is to ask us to set up a Club Account for you. Once the money in that account reaches $2,000 or greater, moving the money to one of our Hi-Yield accounts will earn you a much higher rate of interest, while keeping the money easily accessible, in case of an emergency.
Let’s say you reach your goal amount, what then? Well since you have proven to yourself that you are capable of saving money, keep up that good habit by saving and investing for your retirement, education or even a family vacation.
“All days are not the same. Save for a rainy day. When you don’t work, savings will work for you.”
– M.K. Soni –
For me, my savings has come in handy while I am out on medical leave. Short term disability insurance is somewhat helpful but can take 2 – 4 weeks to kick in and does not cover 100% of one’s salary. So, my “Rainy Day Savings Insurance” is paying off. Without my rainy-day fund, I’d be deep in a puddle of debt.« Back to In Your Best Interest Blog