Hi everyone,

One of the most important things when it comes to money management is having a “Rainy Day Fund”. (You will be sick of that phrase by the time you are finished reading this blog but stick with me) I am sure you all heard before about “Rainy Day Fund” and perhaps you have tried to set one up. If you have one already or not, this blog may benefit you either way. I would just like to talk to you about how I did it and how vital it has proved to be for me. It’s something that in my opinion, needs to be established as soon as possible. It is easier to set up than you may think. Let me talk you through it.

When I first heard about “Rainy Day Fund” it absolutely made sense to me. It was something that I quickly understood the importance of. However, just because I understood the concept doesn’t mean I knew how to create one. It was very difficult for me to put money aside for a “Rainy Day Fund” when everyday was my “Rainy Day” financially. However, I was bought into the idea and wanted to start something. I started off by a slicing a reasonable lump sum of money that I had in my bank account and transferring it to a separate account and calling it my “Rainy Day Fund” and job done. That was easy. Well, it was easy until all of my bills and rent piled up at the end of the month and I was crying out for that lump some of money to bail me out. So that idea was soon scrapped. I tried again, I started by putting aside a reasonable amount of money for a period of few weeks. That started to work but again, life got in the way and I emptied that “Rainy Day Fund” as fast it filled up. That plan was also quickly scrapped. You see the trick is to slowly build up your “Rainy Day Fund”. The trick is small amounts, regular intervals”, but more on that later on.

Here’s why a “Rainy Day Fund” is such a good idea. This is your safety net, your last line of defense, your life saver. When things turn for the worse (trust me, they will at some point) you have that bit of cash to bail you out. Things such as car expenses, kids expenses, hospital bill, college, school, overdue dentist appointment, insurance etc. There is a 1001 thing that could go wrong that will test you financially. Trust me. Yes, we learned, in previous blogs, that it is good to plan ahead and predict your expenses well in advance, but what about those expenses you don’t see coming. They are lurking, and they will hit you when you least expected. That’s just life. So instead of stressing about it when it happens why don’t we prepare for it while the times are good. That is the best time to create and uphold your “Rainy Day Fund”; when you are financially comfortable. You see, a lot of people are in too much of a comfort zone when times are good, you have a steady stream of income, you are healthy and your car is running smoothly etc. To me that’s a potentially dangerous attitude to have. Now, don’t get me wrong, I am not saying that you should suffer and save every single penny when the going is good. That’s madness. When the times are good, you should enjoy your financial freedom and treat yourself. Go on that holiday, go out for dinner instead of eating Pot Noodles, buy that latest phone etc. Money is there to spend. So spend it. But wait! Before you close this blog down and assume you should go on a big shopping spree, consider this – what are the chances that you may get into financial difficulty in the coming weeks, months, years etc. I would say a pretty good chance. Right? There are things that are within your control such as daily expenses, going on less holidays, skip fancy meals etc. but have you ever thought about external factors that are outside your control; inflation, recession, rent hikes etc. Well lets plan ahead for these inevitable struggling times and hopefully these “struggling times” wont be so struggling after all.

When times are good (and even if they are not) I am sure vast majority of us can afford to put aside €10-€20 a week for a “Rainy Day Fund” right? Think about it, if you put aside just €10 per week for a year you will end up with €520 after twelve months, €2600 after 5 years etc. That’s a lot of money isn’t it? That could bail you out of number of things. The size of your “Rainy Day Fund” entirely depends on you and your plan for the future. I heard many theories in the past of how big your “Rainy Day Fund” should be, some say 1/3 of your annual income, some say half of your annual income some say ¾ etc. There are many theories out there, but the only theory that matters is your theory. We are all different, we are all on different paths of life and we all have different commitments financially. If you can comfortably afford €10 to set aside per week then I would suggest do it as long as you can, having that extra bit of cash is never a bad thing. I myself will keep adding to my “Rainy Day Fund” until I need to dip into it, that may be next week or 10 years down the line. If I do end up dipping into that “Rainy Day Fund” then I will start all over again and build up that fund again. If you can afford more money to put into you “Rainy day Fund” then do it. The more the better. Sure, why would you stop, you never know when emergency may strike. So I would suggest keep building that “Rainy Day Fund” for as long as you can.

Thanks for reading and as always I welcome any feedback, comments, suggestions or ideas. I hope you all enjoyed the blog and I hope all of you start your own “Rainy Day Fund”. I hope you may never have to use it, but its always comforting to know that it is there. One more thing, apologies for keep saying “Rainy Day Fund” I must have said it 50 times I this blog, you must be sick of hearing it by now (but, I did warn you all). However, it is very important so having it stuck in your head for a day or two may not be such a bad idea. I am looking forward hearing your comments and keep spreading the word so more people can join us on this journey to financial freedom.

Talk to you on the next one.

 

32 Comments

  1. Yes I started this two years ago and another good point to add to this blog would be try have a 10euro budget or whatever every week but if you can not put away the money a certain week don’t give up on the idea just put it away the next time the money is available to you…

    Liked by 1 person

    1. Thomas,

      That’s a very good point to make. It important not to get discouraged also if one week you can put 20 euro in instead of 10 then that’s also good, but keep adding small amounts overtime will result in a big pot of money that can come useful in times of need.
      Thank you for your comment Thomas, very good point to make. Glad to hear also that this is working out for you. Keep it up

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  2. Yes Thomas I get your point. That was a mistake I made while making a ‘Rainy Day Fund’ I would be unable to put it away one week and then would give up on putting money aside for the following weeks or sometimes months ahead.

    Liked by 1 person

  3. I keep trying to do this but I seem to spend the money on things that are really not rainy day situations. Would you advise a credit union form of rainy day fund to be an easier way to save as this would mean not as easy access?

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    1. Katie,

      Yes if you can set up a Credit Union type of account that you can keep topping up but its a little bit of work to get the money out, that will hopefully stop you from spending on things you don’t need. Any small amount of money is good to put aside.

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    1. Henry, they are both the same thing. Rainy Day Fund and Emergency fund are funds that are there in case of unexpected expense hits. Its your safety net aside from your day to day money. Hope that makes sense.

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    1. Brandon,

      Why do you think this will be your biggest downfall? What is it about the concept that you are struggling with. I understand that different concepts may stumble some people so I and all the readers are here to help. Why do you think you find it very difficult to save?
      Also Aaron, why do you think you find this concept difficult to grasp?

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      1. I don’t know some times as Thomas mentioned above I would be unable to save one week and then just completely give up on it completely because I have one bad week

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      2. Very similar here to what Brandon is saying I seem to get knocked down completely every time I come across a challenge and just give up or just simply forget too

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      3. Ok, I completely understand. I was the same, if at the start of the week I mess up with my budget or savings, I would scrap the rest of the week and start again the following Monday. However, we all just need a change in mind set, yes its good to see every week as a start of a new challenge. However, how about instead of scrapping the whole week because your Tuesday was bad, how about just scrapping Tuesday and we go again on Wednesday. We need to change our attitude to challenges. We are going to meet challenges every step of the way through life, the trick is how are we going to face it. To go on a big shopping spree just because we forgot to budget or put money aside, or are we going to accept the mistake, stand up and budget again, try again, and again.
        I hope the above makes sense. I am still making mistakes with my money saving, budgeting etc. I am getting better because I keep coming back and I keep trying to make it right. As a result I am getting better at it on a daily basis. I completely understand where you coming from guys, but we can keep going, we can keep trying and get better and better. Think off every time you make a mistake as a lesson and learn from it again go again.
        Apologies for the long complicated reply but I just know exactly how ye are feeling. Hope the above helps and if you have any more questions or concerns please let me know.

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  4. New follower here …. Just got through reading all your blogs and thoroughly enjoyed a new and refreshing aspect taken on this topic. Such great tips and taboo subjects addressed so openly … Fantastic

    Liked by 1 person

    1. Yes, just don’t give up. Yes you will stumble, yes you will get discouraged but start the next day with a new outlook and go again. You be proud of yourself on how you overcame the challenge and the bank account will be happy that you did it. Hope it helps Aaron. Keep it up.

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  5. I know I just get in such a bad habit of it and get so disheartened by the whole thing but you are bang on right with what you are saying

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    1. Brandon, we all have bad habits. Some of us chose to accept it others try and improve it. I get discouraged and fed up with it sometimes as well. Money management is tough, you just have to put a plan in place and try your best to stick to it. If you fall or stumble, pick yourself up, start the next day fresh and go again. Keep getting up everyone you fall, and soon you will learn to stop keep falling down. Keep it up and keep your head high. We all human we also make mistakes, however, only few of us do something about it.

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