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How to Save for a Rainy Day

ASB April 24, 2019 | 5 min read N/A

A sudden, unexpected expense can really put a damper on your mental wellbeing. In fact, in a 2017 study by the Federal Reserve, 40% of Americans said they wouldn’t be able to pay for an unexpected $400 expense.

So, how can you avoid being part of that 40%? Consider creating a rainy day fund so that you’re ready for the unexpected. Of course, we at American Savings Bank know that’s easier said than done. That’s why we’ve put together this list of actionable steps you can use to start your own rainy-day fund today!


First thing’s first when building a rainy-day fund: what is it exactly? Your idea of a rainy-day fund might be slightly different than your neighbor’s. The important part is to determine how you would use this fund for you and your family.

Some people like to consider a rainy-day fund and emergency fund as two separate entities for saving. Usually, if you keep your rainy-day money and emergency money separate, you use the rainy-day fund for smaller expenses and the emergency fund only in serious financial emergencies. For example, let’s say your refrigerator stops working. You call a repair company and they tell you they can fix it for $350. This is money you would probably take out of your rainy-day fund. On the other hand, if you suddenly lost your job and needed to cover a couple months’ worth of expenses, you probably need to take money out of your emergency fund.

Alternatively, you can choose to use your rainy-day fund and emergency fund as one savings account. You’ll want to keep enough money in the single account to cover both big and small unexpected expenses. No matter what approach you choose for your family’s rainy-day fund, the most important part is that you work to build savings for sudden expenses.


The best way to save for a rainy day is to think about how much you want to save and a timeframe for saving up. Sit down with your family and look at the past year’s unexpected expenses or potential upcoming expenses. Do you have an older car or appliance that might need repair work soon? Do your children play sports and you’re concerned about unexpected medical bills due to injuries? Think about these things to determine approximately how much you might need to save.

Once you have an amount in mind, decide on your savings timeline. If, for example, you’re hoping to save $600 in the next year, you’ll need to put $50 a month into your rainy-day fund. It’s important to be realistic when deciding on a timeline for your rainy-day fund. You can make setting savings goals easier by taking a quick financial checkup to determine the health of your finances right now.


You’ve set a savings goal and have a timeline for your rainy-day fund, but how can you be sure that you and your family will reach these goals? An easy way to meet your savings goals is to automate your savings with an automatic transfer into your rainy-day fund. Automating your savings means you won’t have to worry about you or your family members being tempted to use the money that’s meant for a rainy day.


Even if you’re sticking to your savings goals, having extra money is a good thing. Finding you have some extra cash at the end of the month after paying your bills? Go ahead and deposit it into your rainy-day fund. Not only will you reach your set goal sooner, but you’ll also end up saving more over the course of your savings timeline.


Have you taken a look at your expenses recently? Look over your expenses for the past month or two and see if there are any places where costs could be cut. Of course, some expenses can’t be cut down. Things like your mortgage payment or other loan payments are usually set expenses. On the other hand, you might be able to slim down how much you spend on smaller things. For example, instead of grabbing a coffee from the coffee shop each morning on your way to work, commit to taking a coffee from home even just three days a week. These small savings can quickly add up over time.


Starting a rainy-day fund doesn’t have to be complicated. Use our simple tips to open a new savings account and start saving today. If you’re not sure what type of account is best for your family’s rainy-day fund, contact us to learn about our different savings account options. Our friendly ASB Dream Team can help you set up an account and get started!

Note: Please be aware that the effect of inflation over time could have an impact on your savings plans.