First and foremost, there are two ways to use income–you can spend it or you can save it. One thing is certain, that if too much is spent and too little saved, your capacity to fight unforeseen expenses will be diminished.
If you are unprepared for an unexpected urgent expense, you will obviously feel nervous, perplexed and panicky, obliged in a certain way to spend a sum of money all at once. Furthermore, as an unexpected expense tends to disrupt all your budget plans.
What can be done?
How can you deal with stress and anguish created by unforeseen urgent expenses?
The answer is putting aside part of your savings for these unexpected expenses, also called the rainy day fund. In other words, take control of your money, and look forward to a more serene life and a prosperous retirement.
What is a rainy day fund?
Without a rainy day fund, you either have to borrow money, make unplanned use of your credit card, or you have to go without that needy item until you manage to save the money for necessary repairs or changes.
The secret behind creating your rainy day fund is to start small and save regularly. You need to be able to keep your commitment. It does not matter how much – or how little – you save, you just need to make a start, and keep going.
Even small regular amounts can grow into significant savings.
An example: Shall you save as little as €10 per week, you will accumulate €520 by the end of the year – an amount of savings that gives you some financial breathing space.
From where to start?
The best way to build this rainy day fund is for you to open a separate account. Make sure that for every salary you receive, you have a standing order which transfers a monthly amount of money automatically to the rainy day fund.
Your rainy day fund will grow from month to month, making quite a difference over time, always available in times of need.
It is important that you make use of your emergency fund for those expenses you really need to settle immediately. For any other non-urgent expense or want/s / desires, there should be a savings account with separate savings goals.
For a quick-reference of when to make use of your Rainy Day Fund, you may log onto
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