Sunday, April 11, 2021

The Benefits of a Rainy Day Fund

building emergency savings fund

Many people have a savings account for things such as vacations, taxes, and other important expenses that they can predict. However, what do you do when something happens that you can’t predict? That’s when a rainy day fund can really help.

Creating a rainy day fund isn’t actually that difficult, and it can help you avoid going into debt if and when your next financial road bump appears. Here are a few reasons to start your rainy day fund as soon as possible:

-To be prepared for financial emergencies

-To build-up budgeting skills

-It’s easy

Many People Can’t Cover a Small Financial Emergency

A rainy day fund can be a great addition to your finances, simply because many people can’t cover even small emergencies. Four out of ten adults in America would have to borrow money, pawn an item, or sell something outright just to cover a $400 emergency. If you don’t have even a few hundred dollars to cover your next unexpected expense, you’re in the majority. But you don’t have to be.

Your rainy day fund doesn’t have to be that big. There’s a difference between “emergency savings” and a “rainy day fund.” And that difference is how much you save.

Emergency savings should be enough to cover at least a few months’ worth of your bills in case something big were to happen, such as a major illness or losing your job. Rainy day funds are for the smaller things, such as small car and home repairs. That’s usually much easier to save up for in advance.

Learning How to Budget in General Is a Helpful Life Skill

You might not be putting away money simply because you just don’t think it’s important. However, the reality is that putting money away for your savings goals is one of the most important things you can do.

Cutting out things that aren’t necessary is a good way to save money for the things that are important. At least temporarily, make coffee at home instead of paying $5.00 at a coffee shop. Buy groceries and household supplies in bulk. Go with store brands instead of brand name groceries. These small sacrifices can help you add to your rainy day fund quickly.

Managing your budget in such a way will keep you from going into arrears with smaller things. Then, as you continue to save, larger things. Before you know it, your rainy day fund has grown into a down payment for that new home you’ve always wanted. (Of course, being smart about how you spend your money, you’ll want to make sure the property is really right for you first with an online address lookup.)

It’s Very Easy to Build Up a Rainy Day Fund

It’s true that many people just don’t have the income necessary to put away a significant amount from their paychecks. But know that you don’t have to fund your rainy day fund all at once; put away what you can when you can. Or you can start by putting away $20 from every paycheck. That may not sound like much. But if you’re paid weekly, that’s $520 in just six months.

Obviously, the eventual goal is to be able to put away enough money for a true emergency fund to cover as much as six months’ worth of expenses. However, if you have to choose between a rainy day fund and no savings at all, the choice seems pretty clear.

Most people won’t miss $20 from each paycheck. And if you happen to run into a $500 speed bump, you’ll wish you’d been doing it all along. It can help you avoid paying even more, especially when you factor in high interest rates and loan fees if you have to resort to credit to get by.


A rainy day fund should be one of your biggest priorities when you’re deciding how to allocate your money. Making a budget that funnels some of your money into a savings account is an incredibly important part of financial awareness. Not only will you be ready if problems arise, you’ll be ready when you want to spend on bigger and better things.

PeopleFinders is an online public records service that can help you stay apprised of your and others’ information in a very tangible way. Read more about how our services can help, plus other helpful online safety advice, relationship tips, and other news on the PeopleFinders blog.

Image attribution: Photo by lovelyday12 –

PeopleFinders was launched in 1999 to give people easy access to public records data. The PeopleFinders mission is to find, organize and make information accessible - empowering people with meaningful answers.

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