Saving for a Rainy Day
Rainy day funds, also known as emergency funds, are an important part of any personal financial plan. Having money set aside for unexpected expenses or emergencies can help alleviate stress and prevent financial hardship. In addition, a person may find they are in a better state of mind to make important decisions if they don’t have to worry about how they will pay for them. Starting a rainy day fund may seem challenging, especially if you're on a tight budget. Here are five tips to help you get started.
1. Set a Goal
The first step to starting a rainy day fund is to set a savings goal. Experts recommend having at least three to six months' worth of living expenses saved up. You can start with a smaller goal, like $500 or $1,000 if your budget is limited. Having a specific goal in mind can help you stay motivated and on track. A good start can help you build on your funds later.
2. Automate Your Savings
Saving money is easier if you don’t have to remember to do it. With Cadence Online Banking, you can set up a recurring transfer from your checking account into your savings account. Consider setting up a small transfer once a month. To set it up, simply log into Online Banking, click the Transfers tab and select Make A Transfer to get started.
3. Split Your Paycheck
If you receive your paycheck through direct deposit, you may be able to split it across multiple accounts like checking and savings. Check with your employer to see if they can help or if they have an online portal where you can set up your own direct deposits. Automating your savings deposits will allow you to set it and forget it, helping you build up savings out of sight and out of mind.
4. Cut Back on Expenses
We’re always looking for ways to save. If you subscribe to services you don’t use much or don’t need, you might consider canceling them. If you’re spending a lot of monthly fees on streaming entertainment, there are free or low-cost alternatives that you may be able to use either as a student or through a partnership with your local public library.
5. Consider a Side Gig
You might be able to fund your rainy day account by taking on a side gig. There are many ways to make extra money such as driving for rideshare and delivery apps, selling items online, flipping thrift store finds, or using freelancing skills you might have. If you’re short on time, even working a couple of extra hours a week could give your finances a boost.
Starting a rainy day fund might take a little time getting used to; the value can amount to many times over the effort and cost. By setting a goal, starting small, automating your savings, cutting back on expenses, and considering a side gig, you can help build a safety net for unexpected expenses or financial emergencies. Don’t put it off. Start today!
Open a Cadence Savings account today
Sources: Ready.gov, Consumer Finance Protection Bureau