4 Ways to Build Your Rainy-Day Fund
Ever heard the phrase save it for a rainy day? It means if you forgo something now, you’ll have it to brighten up a day in the future when you might need it more. This concept definitely applies to your finances. Tucking away a small rainy-day fund can help you — and your wallet — weather life’s unexpected storms.
It may seem hard to save and not spend, but rainy-day savings are typically useful for smaller, unanticipated expenses such as home and auto repairs, or a pet’s surgery. Typically, your rainy-day fund will hold $1,000 to $5,000, offering you some padding for unexpected expenses. Here are a few tips for building this fund.
1. Divide and Conquer
Setting up separate savings accounts for each of your savings goals — including retirement, emergencies, a new home or vehicle, a vacation, and your rainy-day fund — can help you easily track how close you are to achieving each goal. Identifying your goals and labeling each account may also cause you to think twice before spending your rainy-day money on a new phone or a weekend away.
2. Evaluate Extras
Review your bills twice a year and ask yourself honestly if there are recurring expenses you could go without. Could you make your coffee at home instead of stopping on the way to the office every day? What about that comprehensive cable package with all the extra channels that you don’t watch? Reallocating even the smallest of monthly expenses to your rainy-day fund can help increase your future financial stability.
3. Use Luck to Prepare for Unlucky Times
When you do stumble into extra money — inheritances, income tax refunds, raises, bonuses — put at least a portion of it toward your rainy-day fund. Saving money when you have it can pay off (literally) when you don’t.
4. Honesty Gets You the Best Policy
Adjusting your home, auto, or other insurance coverage can also help you save a small amount of money each month. Ask your Texas Farm Bureau Insurance Agent about performing a 360 Review of your policies to help determine where you could raise your deductibles to lower your monthly premium and funnel more money into your savings. “The review lets your Agent know what goals we are working toward together,” says Meredith Campbell, Texas Farm Bureau Insurance agency manager for Hale, Floyd, and Briscoe counties. If you are honest with your Agent, they can help ensure your priorities are protected and help you eliminate extra expenses.
Find more tips for your insurance and finances here.
Coverage and discounts are subject to qualifications and policy terms and may vary by situation. © 2019 Texas Farm Bureau Insurance
