Rain or Shine

By Michele Welsh

Life can throw you curveballs. While you can’t control when and how unexpected circumstances arise, you can prepare a financial buffer — an emergency “Rainy-Day” fund in advance.

But, you already knew this, right? So how do you DO it?

There are several ways to establish a “Rainy-Day” fund. The easiest is to make regular, automated deposits to an untouchable savings account. You can also get creative. Challenge yourself to save more. For example:

  1. Each time you fill up your gas tank, put that same amount into your Rainy-Day account. At the end of a year, not only will you have saved money, you’ll know how much you spent on gas.
  2. Do the same with Starbucks…or Baskin-Robbins…or your favorite pub.
  3. Every January, take a close look at all your bills. Call it a line review. You may be surprised by how many ways you can find to trim regular expenses. Call your cable company to negotiate a better rate. Shop cell phone carriers. Go through your credit card statements. Many families have subscriptions to services they either haven’t used in a long time or forgot they had. Remember that “free trial” membership you signed up for? The one you forgot to cancel? (Fun Fact: According to Quora, 48% of people who sign up for a free trial forget to cancel before they’re charged with auto-renewal)

The bottom line: It’s ideal to have approximately 12 month’s worth of savings stashed in extremely safe and liquid investments in case of emergency. Then don’t touch it. Rather, adjust the amount yearly based on things like cost of living and inflation.

Think of it as a gift. To your future self.