When it rains, it also pours; for most people, their budget cannot withstand a little rain. There’s no way to tell when an unexpected expense might occur, and if you’re not prepared with a credit union savings account, you’ll be left breaking budgets or getting into debt. This article will walk you through four simple steps to create a rainy-day fund.
How much money do I need in my rainy-day fund?
If you’re still living alone, the best option is to have at least three months’ worth of your expenses. Single-income families need at least six months’ worth of expenses as their rainy day fund, and dual-income families need at least three months in the credit union savings account for a rainy day.
This is the best practice to ensure you’ll always have that financial safety net to fall back to. For example, if you were let go by your company, you’d still be able to leave comfortably for some months while you search for a new job. The more money you save, the better. However, the amount above should be the minimum.
Four steps to save for a rainy day
Saving for a rainy day requires effort and disciple. The four tips below will make it easier for you to get started.
- Assess your personal needs: One of the best ways to get started is by first assessing your financial situation and personal needs. Consider your cash flow, financial goals, debt, and people you support financially before budgeting for a rainy day.
- Create a budget: Most people forget to make a budget when shopping. To save effectively for a rainy day, you’ll need a budget. You’d be surprised by how much you can spare when you review your cash flow.
- Set up a separate savings account: You should keep the funds accessible but far from temptation. That means setting up a different credit union savings account for rainy-day savings. You can even schedule automatic transfers from your main account once you know how much you want to save monthly.
