How many times has someone told you to put away money “for a rainy day”? I think my mom may have told me this every day for a year when I got my first job.
We all know why a ‘rainy-day fund’ is important. Things happen. Cars break down, school uniforms get too small, and shingles fall off roofs. It is really important to try to be in a position to pivot when life shoots you a high-speed chest pass. Over the years I’ve heard different versions of the same thing: “Make sure you have at least two paycheques in the bank” or “Put away enough to cover three months of your mortgage in case you lose your job” or “You need to have a quarter of your annual income tucked away.”
While these types of goals are ideal, to most people right now, they are unattainable. Most of us find ourselves trying to make ends meet at the end of every month, and worried that a dip in income would throw us off a steep cliff. Whatever your current situation, if you’re reading this blog, it is possible to start saving a little bit every month. And eventually that little bit can add up.
So how can you start to find a bit of money to put away? It starts with tracking your expenses. How much do you spend per month on the necessities? What is your mortgage or rental payment? What does your average water bill look like? Then maybe, the not-so necessities. How much do you spend per week on fancy coffee drinks? Are you eating out at restaurants a bit too much? Track it all; write it down; create a spreadsheet…whatever works.
Once you have an idea of what you are spending money on, then you can decide what small change you are going to make first. It might sound silly initially, but $5 – $10 per week, means $20 – $40 per month. Extrapolate that over a year and then a couple of years successively, and you can see how big things can emerge from small beginnings.
Every little bit counts. Eventually your savings contributions can grow, but it is vitally important to make saving a habit, no matter how small your rainy-day fund looks at the moment. As your financial situation improves, the habits you develop now, can make you feel more confident about investing or considering other saving options in the future. It is essential to just start.
In life, the rain is inevitable. It doesn’t matter how much we plan or how slow we move, things happen, circumstances change, rain falls. All we can do is try to minimize the water damage as best we can. Part of that process includes putting a little bit of money aside to deal with the unexpected. If you don’t think you know where to begin, or if you currently lack the discipline to track your expenses and properly budget, give me a shout. I am happy to help…And I have lots of umbrellas.