Life talk

16 June 2020

How to be rainy-day ready


We all know how it goes when the car breaks down and needs ‘significant’ repairs, or the dog swallows something he shouldn’t have and is rushed to emergency – you need to access your cash quickly. But while saving our pennies for a rainy day is something we should all do, it’s not always easy (especially when there are so many day-to-day bills to pay).

If you’re finding it hard to get your rainy-day savings started, there are some tactics you can try. Here are our top tips for getting off to a flying start.

1. Get a goal in mind

The tricky thing about rainy-day saving is that you’ll never have a particular goal in mind – so it’s hard to stay motivated. What can help, though, is to have a figure in mind. This way you have a target to shoot for (and you can high-five yourself once you’ve reached it). So how much is ‘enough’ for you? When you’re figuring this out, think about things that have happened unexpectedly in the past, and how much they have cost. Also, think about the day-to-day expenses you would need to cover if, for example, you lost your job. An old rule of thumb is that you should have enough to cover you for six months… but we know that may be a big ask, so pick a figure that you think you can achieve.

2. Create a savings habit

It’s great to have a target in mind to get you motivated, but when it comes to saving, habits are what keep you going. With this in mind, make a commitment to yourself to deposit an amount every week or month (whatever works best for you) into your rainy-day fund. It could be as little as $25 or as much as $200 a week – as long as you stick to it, it’ll add up over time. Just make sure your commitment is realistic, or it’ll be impossible to keep.

3. Set it and forget it

Saving is definitely easier when you don’t have to think about it. So you may want to ‘set and forget’ by asking your employer to pay part of your salary into a separate savings account (aka the emergency stash). If the money is out of sight, it may be easier to put it out of your mind until you really need it. And of course, if at any stage you need to use these funds, they’re there waiting for you.

Another tactic is to set up a recurring direct transfer from one of your accounts into another, straight after payday. It also helps if you don’t carry around the card that’s linked to that account.

4. Make a list of what you consider an ‘emergency’

It goes without saying that all ‘emergencies’ are not created equal. If you dip into your rainy-day fund to pay for an ‘emergency’ designer outfit or mini-break, you’re unlikely to have enough left over for actual emergencies, like a plumbing crisis or a medical necessity. Get a clear picture in your head of the type of things your rainy-day fund is really for, and make a commitment to yourself to only withdraw when you absolutely have to. Don’t forget: the longer your savings stay untouched, the more interest they’ll accumulate.