The Benefits of a Rainy Day Fund

Author: PeopleFinders on November 30th, 2018
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Many people have a savings account for things such as vacations, taxes, and other important expenses that they can predict. However, what do you do when something happens that you can’t predict? That’s when a rainy day fund can really help.

Creating a rainy day fund isn’t actually that difficult, and it can help you avoid going into debt if and when your next financial road bump appears. Here are a few reasons to start your rainy day fund as soon as possible.

Most People Can’t Cover a Small Financial Emergency

A rainy day fund can be a great addition to your finances, simply because many people can’t cover even the smallest emergencies. Nearly half the adults in America would have to borrow money, pawn an item, or sell something outright to cover just a $400 emergency. If you don’t have even a few hundred dollars to cover your next unexpected expense, you’re in the majority, but you don’t have to be.

Your rainy day fund doesn’t have to be that big. There’s a difference between “emergency savings” and a “rainy day fund,” and that difference is how much you save. Emergency savings should be enough to cover at least a few months’ worth of your bills in case something big were to happen, such as a major illness or losing your job. Rainy day funds are for the smaller things, such as small car and home repairs. That’s usually much easier to save up for in advance.

It’s Very Easy to Build Up a Rainy Day Fund

It’s true that many people just don’t have the income necessary to put away a significant amount from their paychecks. Remember that you don’t have to fund your rainy day fund all at once. You can start with putting away $20 from every paycheck. That doesn’t sound like much, but if you’re paid weekly, that’s $520 in just six months.

Obviously, the eventual goal is to be able to put away enough money for a true emergency fund to cover as much as six months’ worth of expenses. However, if you have to choose between a rainy day fund and no savings at all, the choice seems pretty clear. Most people won’t miss $20 from each paycheck, and once you hit a $500 speed bump, you’ll wish you’d been doing it all along. It can help you avoid paying even more, especially when you factor in high interest rates and loan fees if you have to resort to credit to get by.

Learning How to Budget in General Is a Helpful Life Skill

You might not be putting away money just because you don’t think it’s important, or you don’t have any drive to do so. The reality is that putting money away for your savings goals is one of the most important things you can do, and cutting out things that aren’t necessary is a good way to save money for the things that are important. At least temporarily, make coffee at home instead of paying $5.00 at a coffee shop. Eat out less often. Go with store brands instead of brand name groceries. These small sacrifices can help you add to your rainy day fund quickly.

Managing your budget in such a way will keep you from going into arrears with smaller things; then, as you continue to save, larger things. Before you know it, your rainy day fund has grown into a down payment for that new home you’ve always wanted. (Of course, being smart about how you spend your money, you’ll want to make sure the property is really right for you first with an online address lookup.)


A rainy day fund should be one of your biggest priorities when you’re deciding how to allocate your money. Making a budget that funnels some of your money into a savings account is an incredibly important part of financial awareness. Not only will you be ready if problems arise, you’ll be ready when you want to spend on bigger and better things.

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