When we think of a rainy day fund, we imagine it to be a big pile of cash underneath the mattress. It’s liquidity, easily used in a pinch when you need cold hard currency to just get you out of a jam. However, there is more than one type of rainy day option. Sometimes, life throws curveballs, and other times it throws bowling balls. For almost every scenario you can experience, there is an immediate and long-term financial option that you can turn to. These are just some of the avenues you can use to untangle yourself from a sticky situation.
It does exactly what it says, it’s a fund that’s used in emergencies. But what makes it so special? Firstly, let’s understand the difference between a rainy day fund and an emergency fund. The latter is always smaller and generally used for small unexpected financial burdens. This could be a scenario where you have lost your job and you need enough money to pay the rent or mortgage for 2-3 months. Maybe your utility bills have risen and you don’t have enough to cover the extra right now. You can dip into your emergency fund for this.
Here is where you can put your emergency fund.
- High-yield savings account: These types of savings accounts have stringent restrictions initially. The high-interest rate is unlike normal savings accounts and thus, better for your emergency fund needs.
- CDs: Certificate of Deposit accounts offer a fixed high-interest rate. Don’t expect to be able to withdraw your money for between 1-3 years. However, the reward of receiving a guaranteed high interest, means it’s a perfect account for an emergency fund.
- Vault service: If you would much rather have your money at-the-ready, then using a personal possessions vault service is the way to go. You can walk into the building where your safety deposit boxes are, and access your small box whenever you wish.
When you’ve been nabbed
Nobody ever expects it, but what is your plan if you get arrested? You may not have access to the money you need, in order to be let out of police custody. There are usually a set number of things you need to do, to satisfy a judge if you want to be let out of the local jail. Because they need you to restrict your actions while not necessarily detaining you, you’ll need to pay a bond. However, these bonds are not usually easy to pay. That’s where some kind of bondsman service like Case Closed Bail Bonds comes to the rescue. You can use this service 24/7, so no matter what time it is you can rely on their services. The circumstances matter. Their bonds can only be used for crimes such as DWI/DUI, assault, domestic violence, theft, drug possession, and property crimes. They offer flexible plans for you to make the payments and dispatch agents to your location, with electronic forms to make the whole process easier.
The all-important budget issue
Let’s not just talk about the various services that you can use for your rainy day fund. Budgeting is the number one issue on people’s minds as, without a proper plan to put money away, you won’t have any type of rainy day fund at all. Here are some basic techniques for rainy day fund budgeting which is unlike any other type of money saving.
- The 10% rule: You never want to be in a situation whereby you need to use your rainy-day fund but don’t have enough money in it to set your right. To keep things simple so you can make consistent deposits. Put away 10% of your monthly salary into a rainy day fund, such as a savings account, CD, IRA, money market account, or even just cold hard cash in a deposit box. Most rainy day funds have around $3-10,000 on average. If you earn $35,000 annually, your monthly wage is $2,916. You’ll put away $290 a month, which means you’ll be above the minimum average threshold in 12 months.
- The leftovers: If you can’t manage the 10% rule, then just save whatever is left at the end of the month. This might seem as if there’s a lack of discipline sewn into this method but it’s accounting for more flexibility. After you’ve paid your rent or mortgage, done the grocery shopping, paid your travel expenses, then you should save whatever is leftover. The amount will fluctuate but it’s better than nothing.
- The minimum requirements: Having to obey the obligations of a savings account will help with your budgeting. Savings accounts need you to put in a minimum amount of money into the account in order to qualify to receive the interest rate for that month, which is totaled at the end of the year. If you don’t, you’re set to lose out on it, which can sharpen your focus and help you budget more effectively.
Start off small
The concept of the piggy bank is still very much valid in this day and age. If you don’t want to go through the trouble of setting up bank accounts and using specialized services like safety deposit boxes, there’s always the option of an at-home safe. Take a look at the different ways you can store paper money safely i.e. without it decaying. There are lots of different safety boxes that you can have at home, some which use padlocks and others that use electro-magnetic locks that require pin codes.
Keep the box hidden, out of sight, and don’t tell anyone about it. You should seek to keep the box somewhere, you wouldn’t normally go. The loft, basement or underneath a floorboard are all great places. You should also bear in mind that should a natural disaster like a flood befall your home, you’re not going to lose all your rainy day savings.
rainy day options are great get-out-of-jail cards which you can use in a pinch. You can also use rainy day services like bondsmen to literally get out of jail when you need to get back to normal life after a mistake.