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Saving money for a specific purpose is one thing, but you should also put some money aside into a rainy day fund. This ‘just in case’ money can come in really handy, so here are four important reasons why you should have a rainy day fund.
You Have Money In Case Of Emergency
You can look after something to perfection and take the best care possible, but eventually, things break. If you fridge, washer or car breaks, then you need to have the money to pay for it to be fixed or for a new one. Your rainy day fund can really help you out in these emergency situations. It means that you have some money dedicated to times like this and even if it doesn’t cover all of the costs, it will go a long way towards it. You can never 100% predict and know when something is going to stop working and need replacing, so it is always worth having a rainy day fund.
You Can Avoid Debt
If something does break and you don’t have any money set aside to fix or replace it, then you might need to borrow money. If you need your car to get to work, then you need to get it fixed, and it cannot wait while you scrape together the money. You can take a small loan to cover the amount, but even this comes with interest. You will be better off and more independent financially if you have saved money into a rainy day fund. While borrowing money might be an easy alternative, you will end up paying back more money than you borrowed and if you fail to make the payments, then it could further impact you and your credit score.
You Will Have Peace of Mind
Peace of mind is something that should never be underestimated. The simple fact that you know that you have put money into a rainy day fund will help you feel more relaxed and less stressed even if you don’t notice it. You won’t have to worry about what you will do if something breaks down and where the money to replace it is going to come from. This is because you will know exactly where it is coming from – your rainy day fund. If you regularly save money into your rainy day account, then you will have a peace of mind knowing that if something goes wrong, then it can be taken care off.
Creates A Good Saving Habit
If you don’t already have savings, then starting by making a rainy day fund is a good idea. It is small and can help you get used to the idea of saving money each month. The more you save, then better off you will be in the future. Your savings gain interest each year and will steadily grow. The same is true for your rainy day fund or any other kind of savings account. Saving money is always a good thing, and you should get into the habit of doing it.