If you’ve ever had to apply for an emergency loan from your bank or alternative lending institution, then you may have a better appreciation for the importance of creating and building a rainy day fund. If you don’t have a rainy day fund, it might be a good idea to start. Rainy Day funds are typically used for emergency car or home repairs and unexpected expenses. If you are struggling to set a little money aside every paycheque, here are a few tips to help.
#1: Sign up for an Automatic Savings Program
One of the hardest things about saving money is making it a habit. We often forget or use our funds for other important expenses. The trick about saving for your rainy day fund is to treat your savings like a bill; making it harder to view it as an “optional” expense. One way to do this is to set up payments into a savings program so that it happens automatically. That way, every time you look at your bank account you’re surprised by how much money has accumulated.
#2: Cut back on Take Out Coffee
If you buy one cup of Starbucks coffee a day, you’re spending roughly $125 a month on takeout coffee. Do yourself a major favour and skip the Starbucks line. You’ll save a significant amount of money if you bring your coffee from home. The extra $5 a day can be allocated to a savings account instead of a daily coffee expense.
#3: Bring Your Lunches to Work
When considering daily expenses, buying your lunch is another area to evaluate. Buying lunch every day costs roughly $2,000 a year; often spent on nutrient depleted meals chock-full of trans fats and flavour boosting chemicals. Save money and increase your nutritional intake by bringing healthy snacks and sandwiches to the office.
#4: Don’t Spend More than You Make
This simple statement is the underpinning issue behind everyone’s debt. Not spending more than you make is difficult when you have a credit card or line of credit. No one is perfect, and we don’t expect you to get it right every time. But as long as you make a conscious effort not to spend more than you earn, you’ll likely find yourself resisting unnecessary purchases, which is an automatic money-saver.
#5: Start a Jar
Money jars may seem like a through back to childhood piggy banks, but they can be effective. This simple trick allows you to budget your money based on cash you put in a special jar. You may even find it beneficial to have multiple jars labelled for specific expenses; groceries, entertainment, bills, etc. Once your jars for fun expenses are empty, you’ll have to wait for the following week or month to spend on them again. This method can also help you visualize where your money goes and how quickly it can disappear. Additionally, it may help you visualize how easily your savings can build up. And in turn, how satisfying it is to stick with the habits.
While building a rainy day fund is a great savings method, some unexpected expenses are too big to prepare for. That’s where LoanConnect can help. We are Canada’s number one search engine for lending organizations, and we’ve helped individuals across Canada during financial emergencies. Learn more about how it works here.