Why is it important to save for a rainy day?

Do you have money set aside for a rainy day?  Are you prepared for surprise expenses such as car repairs or other major necessary expenses such as education, or even retirement.  Do you have the funds to just go on a much needed vacation when you get the chance?  If the answer is no, then you should definitely consider setting aside a little nest egg.

Did you know that financial advisors recommend having enough money set aside to cover at least three months of monthly expenses?  Your goal should be to set aside as much of your income as you can each year.

Here are some tips to help you grow a financial buffer and save for that rainy day:

 

 

Begin with a small amount to get into the habit of setting aside money each month.  Even if it works out to just pennies a day.  Slowly increase the amount that you are setting aside as your budget allows.

 

 

Create a budget within which you can live comfortable and then take a look at ways to cut back further on expenses or even create more income.  It may help to write down an expense list where you write down everything you spend on.  This will make it easier to see where all your income is going.

 

I found when I started paying attention that I was paying an unnecessary amount in bank fees.  After I took the time to compare bank accounts for the best rates I was able to cut these fees by 1/3 just by changing the type of account I was using to better suit my needs.

 

Consolidate your debt

If you are borrowing on a credit card it may take a long time to repay your debt, especially if your card carries a high interest rate.  Acquiring a personal loan from a bank with a lower interest rate on a payment schedule will allow you to be debt free within a shorter time period and cost you less in the end.  Cut up your credit card or reduce the limit to a level you can easily repay within the month.

Setup a Savings Account

If you haven’t already, you will want to setup a savings account and get your money working for you.  Invest time into researching various account options but remember that savings account rates are important.  This is why you do not want to just go with what you know.  You risk getting a lower return by not researching the various options out there.