Building up any savings fund requires commitment and discipline. It doesn’t matter much if you earn less than your next-door-neighbor. What’s important is that you mind your own earning, paying, and saving capacities to find out how much money you can work with. Financial advisers say that a rainy-day fund should not be confused with an emergency fund because the latter refers to the fund you set aside to keep you afloat temporarily should you find yourself without a job or if you cannot work for the time being. A rainy-day fund is what you put up gradually to be left untouched until you need it for some unforeseen and significant expenses such as medical or hospital bills, house or vehicle repairs, and other unplanned but unavoidable situations that require you to spend. So, just how do you save for a rainy day anyway? It’s not at all hard to do.
Be clear about why you’re saving
A rainy-day fund is not meant to buy you that dream or any other things that your heart desires. You will create and let the fund grow for more important, unexpected, and at times life-threatening events. If you have the means to save for something that you want, then you must keep this amount separate from your rainy day fund.
Choose your savings tool
These days, banks and other financial institutions offer a wide range of alternatives depending on your risk profile, financial objectives, and of course the amount of money you’re putting on the table. All you need to do is to research, visit the bank, and listen to a trusted advisor who can answer your questions. Don’t put all your eggs in one basket but be open to considering more than one savings option.
Record your goal and progress
Make an accounting of your rainy-day targets for specific milestones. It is but natural for you to experience some bumps along the way (like facing a medical emergency or a car trouble even before reaching your desired rainy-day fund target), but if you have in black and white the figures that you’ve been growing, then it would be so much easier to make adjustments.
Take it easy on any windfall
If you suddenly find yourself with extra money, learn how to stave off the temptation of indulging in a shopping spree. Even from the very start of your saving-for-a-rainy-day journey, make a pact with yourself that you’ll save some, if not, all of what you’ll get from anything extra.
Collect your “change”
Your parents might have given you your first piggy bank, but the concept should remain when you’re all grown-up and working. Get a large jar or container with a sealed lid and start collecting any spare change that you have. It’s not just a decorative item in your room. Who know — it might come in handy one day when you would need to “break the glass in case of a fire.”
Take advantage of credit card rewards
Credit card companies now have reward features that let you earn points in exchange for items. All you need to do is to select your desired item and work towards earning that particular reward. In this way, you need not save up and spend for such stuff and just use the money to add to your rainy-day fund.
Throw away those bad habits
Or if you’re not ready yet to say goodbye, cut down on them. If you’re dead-set on saving for you and your loved-ones, then you’d be more than willing to make some compromises. The best way to convince you to get rid of the vices is to compute for the daily, weekly, monthly, and yearly costs of maintaining those habits and realize just how much money is spent.
In conclusion, you now better start saving for your rainy-day. It’s all a matter of discipline and determination.