Life is defined by the unexpected.
Are you prepared for the next time your car breaks down? For the next possible medical bill? For the next unplanned home repair that can’t wait? These all fall into the “rainy day” category.
Ideally, we should have a fund, known as a “rainy day” fund or emergency fund, to help us cover these unplanned expenses without having to turn to high interest credit card debt to cover it. If you don’t have one, now is a great time to start!
Include an emergency fund in your savings plan when you get started. You know your finances the best, so think of an amount that would be sufficient to have on the side for any unexpected, and possibly expensive, happenings. Now figure out how will you achieve that number? Saving automatically is a great way to get started. Choose an amount that you can comfortably put away and set that up to be automatically transferred to a savings account. If it helps, set up a separate savings account specifically for it that you can nickname “emergency fund” or any name you choose. This helps to keep you from dipping into this fund for unnecessary purchases. Over time, if you see that you still have leftover money each month, you can increase the amount that you save and build up that emergency savings even faster. Just think about the peace of mind you would have if you knew you had an emergency fund to back you up in case you really need it!