Saving money can be a challenge. Many people can only save money if they are saving for something specific, for example, a holiday, a car or a wedding. It’s a little bit harder to save when you don’t have a specific goal to work toward. However, putting a little money aside each week or month is a great idea. Here’s why you should consider saving for a ‘rainy day’.
Reduced income
Imagine suddenly being out of work, having to take time off for sickness or having your benefits cut unexpectedly. How would you survive? ‘Rainy day’ money could help you cover the essentials while you look for another job, recover from illness or sort out your benefits. If you can save enough money to cover three months’ worth of rent, food and bills, then you will give yourself peace of mind should your income be reduced for any reason.
Unexpected expense
When a car, boiler, washing machine, fridge or cooker breaks down, it is not only inconvenient, but it can also be a big cost. Your ‘rainy day’ money can be used to cover these types of unexpected expense, meaning you can replace essential items straight away.
Children’s future
Perhaps you want to save some money for your children for when they are older, so you can help them buy their first car, assist with the cost of university or give them money towards their wedding or first home. Put a little away each month into a separate account, and you’ll have a nice lump sum saved when the time comes that they need it. Saving as little as £20 per month means that in five years, you’ll have over £1000 saved for whatever they need.
Put a little aside every payday
Rainy day money might not be very exciting, but it can give you some peace of mind and financial security. Having savings means that if unexpected costs crop up, you don’t have to borrow from friends and family or rely on credit cards or loans.
The best way to save is to decide how much you can afford once you have budgeted for the essentials such as rent, bills and food. Every time you get paid, transfer this amount to a separate account. If you put it away straight away, you’ll find it easier not to spend it. If you can afford a little extra some months, transfer that too.
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