How to Build a Rainy Day Fund When You’re Already in Debt

Have you ever been concerned if you will have enough in savings if an emergency were to occur? It may not be simple, but methods of saving enough for a good emergency do exist in case unforeseen expenses come up.

Many Americans who are living from one paycheck to the next have a difficult time putting away the essential $1-5,000 for an emergency.

“Rainy day funds and emergency funds are different. A rainy day fund takes care of unanticipated costs such as medical bills in case of injury or car repairs. An emergency fund would cover someone for a longer duration, in case their job is lost or if another major obstacle occurred,” remarked George Sink P.A.

Don’t worry if you can’t put away a lot of money at once; you can still implement a smart plan for saving. The following tips may be useful for you to begin a savings fund.

Get in the ‘No Extras’ Habit

Try and trim as many areas as you can to effectively save more of your take-home pay. You should aim to prepare for a real emergency, and remember that because sometimes it may instead feel like you’re trying to make your life miserable right now. Cut extra special things like eating out several times a week and premium subscriptions such as cable.

Put Together a Budget

Budgeting can help you save, even if you feel as if you aren’t in a very good position to begin saving as it is. Many surprisingly don’t follow a budget for everyday transactions, which leads to a lack of savings for large and unanticipated expenses. Distribute your pay into three categories: savings, fun, and everyday bills.

Pay off Credit Cards as Quickly as Possible

Credit cards may be intended for emergencies, but can actually cause serious cash flow issues on their own. The interest rates on credit cards can compile fast if you can’t pay your entire balance every month. Instead of using a credit card and accruing debt, consider having a unique mindset. It could save you from being stuck under high-interest charges on money that you never had to begin with.

Hold Yourself Accountable to Your Savings Goals

Your priorities may need to be shifted if you want to be successful when earning and saving for a rainy day account. You should consider this a benefit, and pay yourself before you do anyone else. It helps to take on the perspective that your savings plan is an important and long-term worthwhile commitment and not a form of discipline or punishment.

It can be difficult, but with a plan, you can be sure to address your targets head-on to eventually have a rainy day savings fund. Now, you can enjoy peace of mind since you know exactly how to begin putting a portion of your income away, and enjoy this taste of security because it only gets better as you stay on the path.