Inflation Cents

5 Simple Steps to Level Up Your Rainy Day Savings

rainy day savings

Where there is sun, there is rain. Rainy days are inevitable and we must prepare for them by building a rainy day savings fund. Here we are not talking about some kind of floods or heavy rains, but about bad times when you are messed up financially, and you are in need. You must level up your rainy day savings. 

 

For example, your car undergoes an accident and now you have to pay $500 for its repair, or when your pet is sick and you have to take it to the vet. Or you or your family members have some kind of medical emergency and you need to pay for the hospital bills. If nothing else, what if your heating bills exceed your monthly income, how will you manage the expenses?

All these expenses can add up at once and scratch your head about how you’ll manage to pay them. Even if you get a loan, the interest can eat you up.

That is why it is essential to have some dollars in your separate account for days like these. You are gonna thank us later.

So many of you might be thinking that your credit card is enough to cover those expenses. You can if you want to but our answer is no. Credit card companies are waiting to make use of such situations and you must have seen their marketing for such situations.

If you make enough money that you can pay the bill before they charge you interest, then using credit cards is not a bad idea. After all, that’s what credit cards are for. But here is a catch. After we make big payments, we prefer to pay the monthly minimum amount and use that money to buy something else. That is where make a huge mistake. For example, your total debt is $1500 and the interest rate is 17%. When you make monthly minimum payments the total amount you have to pay will rise from $1500 to around $2500 and you will have to take years to pay that amount. That is a lot of money and time when you could have simply saved your time and money.

So, that is why, you guys need to have a rainy day fund, and here are simple steps you need to take.

77% of Americans live from paycheck to paycheck and saving for a thousand dollars in your rainy day account seems impossible. It’s a bit challenging but once you get hold of this you will find a lot of financial benefits.

Follow these simple tips and you will find your expenses getting in line.

1. Create a Monthly Budget

Your monthly budget needs to be very realistic. You need to have a clear understanding of how much your total income (after tax deduction) is and you much you need to spend. After you create your monthly budget and stick with it consistently. You can follow a simple 50-30-20 rule in which you have to set aside 50% of your income for your basics, 30% for your needs, and 20% for your rainy day fund.

You can download any budget app and put all your expenses and income into it. You can even set goals and also get valuable insights in the form of graphs of your financial progress.

2. Set a Savings Goal

You have created a budget, you have downloaded the app, and you are counting your expenses, but have you set a goal on how much you want to save? We have heard goals are important right? Having saving goals and working hard to achieve them is extremely important. If you are new to saving, you create small goals like saving $50 a month or saving $100 a month. You can even give yourself a small treat after you have reached your target. Just keep yourself motivated, that’s all.

Once you start doing that, you will understand that saving money is addictive and you can achieve really big things in life with small cents saved each month. Remember, our goal here at www.inflationcents.com is to “turn cents into dollars”.

3. Create a Saving Account

For easy tracking and preventing yourself from using your savings funds for impulsive purchases, you need to keep your savings account separate from your other account. Do your research and find a bank that pays more interest rates on saving and create an account with them. Also, consider that bank doesn’t charge any monthly charges and has no requirements for minimum balance. Also, make sure that their transaction process is simple and won’t take days for money transfers. You could also consider the Savings Investment App and literally “turn cents into dollars”.

4. Automate your Savings

You can set up automatic deductions from your paycheck to your savings account. That will save you from unnecessary temptation to use all of your paychecks. In that way, your monthly savings will grows and you will sleep with peace of mind. A couple of paychecks later and you won’t miss that minimal amount at all. Forget it and save it.

5. Your Rainy Day Savings is meant for Rainy Days

Your rainy day fund is not meant for spending on a concert or buying a designer bag now you have all the money. It is truly for rainy days. However, if you reach your rainy day savings goal, you can put some money aside for sunny days and use that money for a vacation you always wanted to go on. Don’t fall into the temptation of spending all your saved money on one impulsive idea.

Final Words on Your Rainy Day Savings

Once you develop the habit of saving a small amount of money, you will eventually find yourself controlling your expenses and moving towards bigger saving goals. You will start saving for your emergency days. Like, what if you lose your job, what if you lose your apartment, or what if your car meets a big accident? This habit of saving money will help you save thousands of dollars in a few years and you will feel like having your life in control. Moving a step further you will even start saving for your retirement. We have seen people starting side hustles to add to their savings accounts once they become adept at this habit.

Disclaimer

Information provided on InflationCents.com is for informational/entertainment purposes only. This information should not be considered as professional advice. Please seek a certified professional financial advisor if you need assistance. Rates and offers provided by advertisers can change frequently and without notice. We attempt to provide up to date information, but it could differ from actual numbers. Inflationcents.com may be compensated by 3rd party companies that are mentioned either through advertising, reviews, affiliate programs, or otherwise. All reviews and articles are based on objective analysis and no compensation will tilt our opinion.

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