Cheryl Fleming - RE/MAX Executive Realty


Whether you call it a "rainy day fund" or a "financial cushion", having some money set aside for emergencies or unexpected expenses can help keep life on an even keel.

Although health insurance and a homeowners' policy can provide a measure of protection, insurance deductibles can take a large bite out of your bank account.

In addition to all the predictable expenses that accompany home ownership, mechanical systems like furnaces, hot water heaters, and air conditioning units have a way of breaking down at the most inopportune times. Another crisis that many people aren't prepared for is the potential loss of a job. When families don't have money set aside to weather the storm of an unplanned income loss, then there's no "safety net" to cushion the fall.

Strategies For Saving Money

The good news is that there are plenty of ways to build up financial reserves, but it often requires self discipline, a new set of habits, and the intention to make it happen. One of the first steps to putting some money aside for a rainy day is to open up a separate bank account. If you put extra money in your regular account -- or (even worse) keep it around the house -- chances are it will get spent pretty quickly. However, if it's deposited into a separate account that's designated for emergencies, unexpected household expenses, or even a college fund, then it'll stand a greater chance of being left alone until it's needed. Putting money aside does take some doing, but it can contribute to your family's financial security and ability to do things that are important to you.

If you have a tight budget, you're probably wondering where this extra money is going to come from! Sometimes, the very act of developing a written budget can provide you with clues and ideas for reducing your expenses. You'd also be amazed at how much the savings can add up when you comparison shop, buy in bulk, use coupons, negotiate lower interest charges on your credit cards, quit smoking, car pool to work, cut back on restaurant food, and make up your mind to live just a little more frugally.

Depending on how committed you are to creating a financial cushion, you could also make the fund grow faster by depositing a percentage of Christmas bonuses, tax refunds, manufacturer rebates, salary increases (raises), and other sources of extra income. Additional ways to beef up your financial safety net could include getting a part-time job, doing freelance work, holding a garage sale, or selling unwanted items through ads or flyers. When you pay off credit cards, car loans, or other debts, you could also redirect some or all of those monthly payments into your "future needs fund."

Whatever you decide to call it, it's nice to know that there's some extra money on hand for unexpected expenses, emergencies, potential job losses, college tuition, weddings, family vacations, home renovations, nursing home costs, or even retirement.





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