Your “rainy day” fund should have anywhere from $500 to$1,500 dollars in it. This account is smaller than your emergency fund and should be used when your car breaks down or you have to replace an appliance in your home. Whereas an emergency fund should be able to support you and those that are dependent on you should there be a huge change in your life.
When you are setting an amount of money for your emergency fund, you will want to multiply your monthly costs by three or by six. Some people prefer to have a three month fund while others prefer to have a six month fund.
As you put money in these savings accounts, you will develop some great saving and spending habits. Keeping that money stowed away will ensure that you are able to avoid compulsive spending and you can maintain control of the money that you have saved.
Saving can be hard when there are many things that you feel you could spend the money on. Make yourself a small savings goal and then when you reach it, you can increase the goal. As you continue to increase the goal, you will be able to reach your ultimate goal. Starting small can help you get used to saving money and having it without spending it.
When you are putting money away, do not put it in an account that you cannot have immediate access to. During a time when you need money from either fund, you will want to be able to access it quickly without worrying about tax penalties when you take the money out. Start saving with your next paycheck, this way you know that you will be safe and protected should something happen.
Make an appointment to talk with one of our trained insurance professionals at Fox Insurance. We can set you up with insurance policies that may take some of the financial burden of a disaster or unexpected event off of the shoulders of your savings account.