Have No Money to Spare? How You Can Build a Rainy Day Fund!

December 6th 2012
By Mikki Venekamp, AFC®
Personal Financial Counselor

Most financial experts recommend that people should set aside $500-$1000 as their emergency fund (aka rainy day fund). Most of us don’t even have enough money to make ends meet, so how can we squeeze any more money out for a rainy day fund? I used to feel this way, but my husband and I worked hard and completed the mission of fully funding our rainy day fund. Now I would like to share our workable solution with you.

Save for Emergencies

First, you need to create a “Money Map” (aka budget) for yourself or your family. You will need to know your monthly income (take home pay) and monthly expenditures (bills). Then you use your income minus your expenses and hope you will get a positive number as the bottom-line. What happens if the bottom-line number is in the red? Don’t panic! Look and see where you can trim expenses to bring the number to zero instead of a negative number.

To trim your budget, cut unnecessary spending such as a cup of Joe in the morning, energy drinks in the afternoon, and going out for lunch. If cutting spending still does not push the number to the zero mark, then you probably need to find extra income like a part-time job. I know… I understand…you probably think I am crazy suggesting getting another job. I got it. You have been working all day, and yes, I just asked you to take on another part-time job. Let’s think about this: if you can’t cut your spending, then you have no choice but to increase your income. Having a part-time job is a temporary thing, not a long term situation unless you want it to be.

Emergency Preparedness – Are You Financially Ready for an Emergency?

Once your bottom-line is in the positive, you need to decide where you are going to apply that “extra” money that is left over. BINGO… Emergency fund it is! 
After you have created your Money Map, you can put your money on auto pilot. You might want to open a savings account just for emergency fund purposes.  It might help to open this rainy day savings account with a different financial institution than where you currently have your checking account. You want to avoid turning this savings account into a revolving savings account, which means money goes in and comes out the very next day due to the convenience of online or phone banking transfers.  Sounds familiar, doesn’t it? Most of us have a savings account, but sometimes it is actually a revolving savings account which has no money in it.

Murphy’s Law and Emergency Savings


Once your rainy day fund account is established, you could to go into myPay and setup a monthly allotment for your rainy day fund or set-up an automatic transfer to come out each pay period.  Then sit back, relax, and watch your rainy day fund grow.

Finally, you need to commit to your savings plan by following your money map, and do not touch your rainy day money unless a REAL emergency happens. Having trouble navigating your money map?  Look for an “accountability buddy” such as a spouse, financial counselor, money coach or friend to be your savings cheerleader!