A rainy day savings account isn’t just a turn of phrase your grandmother used to use. It’s an insulating layer between you and unexpected expenses. Think of it as your “Oh EXPLETIVE!” account: a buffer of funds to help soften the blow when stuff unexpectedly hits the fan, which it inevitably will.
What is a rainy day savings account for?
- Unplanned car/home repairs.
- Medical deductibles.
- Unexpected medical or dental bills, like an ER visit
- Or really anything that could happen that has the potential to wipe out your checking account
A rainy day fund is not the same as an emergency fund. While an emergency fund (ideally) contains at least 3-6 months of living expenses, a rainy day fund is usually just $1000-$5000, making it an easier goal to achieve. Once you have a rainy day fund in place, you can start working on your emergency fund.
What is a rainy day savings account not for?
I hate to break it to you, but a rainy day savings account is absolutely not for:
- Transatlantic plane tickets
- Really amazing shoes
- A motorcycle
- Picking up everyone’s tab on a night out
Having a rainy day savings account is adulting at its finest: denying yourself the right to “make it rain” for the greater good. Your future self who just broke a tooth during a rousing game of frisbee golf will thank you.
So how do I start building one?
If you’re living paycheck to paycheck, (or close to it), saving even a little bit can feel overwhelming. But anyone can save. Really. Here are a few (mostly) painless ways to start setting some cheddar aside every month:
- Got a raise? Even a tiny one? Put that extra into savings each month.
- Finish paying off a credit card or loan? Keep making those payments, but into your rainy day account. You’re already used to living without those extra dollars.
- Tax refund? Throw it in there too. You don’t need those new jeans. Or a weekend in Nash-vegas.
- Congratulate yourself for being a grownup. Nicely done.