Create a Rainy Day Fund in Two Steps

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Congratulations!  If you’ve been following along with our blog posts this month, you have a solid plan for how to make the most of your money paycheck to paycheck.  Knowing what all you can accomplish with your finances each week and month is HUGE.

But most of us have dreams beyond living paycheck to paycheck.  Indeed, part of the security of enjoying your money means knowing you can weather whatever life is going to throw at you.  As one of my clients said, “That’s not an emergency fund.  That’s an “I-knew-this-would-happen-eventually fund!”

There’s two steps to creating a Rainy Day Fund that will catapult your finances from surviving the month to thriving with a purpose:

Just Start

You’ve done the math and have a working budget.  Now it’s time to see that rainy day money grow.  Here’s some quick options to get the mental (and physical!) inertia going:

  • If you have a checking account, you’re halfway there. Every bank and credit union that offers a checking account will also offer savings.  That makes it super convenient and easy to transfer funds back and forth as needed or to have your paycheck deposit split between the two.  Particularly in a financial crisis like COVID-19, watch your automatic payments and transfers carefully.  Keep essentials first, and save as much as you can alongside.
  • There are apps and online banks that are centered around helping you save (like Simple, Chime, and Acorns). Some larger banks are also offering services to “round up” your purchases and put the difference into savings so that you set aside without feeling the huge pinch all at once.  This includes Bank of America’s “Keep the Change” program and Fifth Third’s “Dobot” for example.

Differentiate Seasonal From Emergency Costs

This one had me stymied for years!  But I’m now convinced it’s the next real step for understanding your rainy day fund.  Every summer,  daycare/camp costs, annual car insurance, and my daughter’s birthday hit in the same month and devastated my savings.  What I wasn’t seeing is that our savings was higher than at the same point last year. When you have both seasonal and rainy day savings merged together, it’s hard to see the upward trend through all the rollercoaster balances along the way.  So if you’ve taken the step to have a separate checking and savings and you’re managing things pretty well, I strongly recommend this as the next step to really boost your finances.

  • Keep your seasonal and necessities costs in an account closely tied to your checking like I mentioned above. That way, you can move funds easily.  Think of this as your short-term savings.  My husband and I keep enough there to cover things we know will be coming up in the next couple months.
  • The other savings go into an account that (hopefully) you won’t have to touch for a while. We use an online account with a solid interest rate for these.  Scroll through some great options at this link.

We all have places that we get stuck trying to create a rainy day fund.  If it’s creating a plan and finding motivation, Apprisen can partner with you to create this together.  If it’s knowing you’re taking the right next step or staying accountable, Propel or our financial coaching can be a great way to keep you engaged with your goals.

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