The importance of having rainy day savings
The term “rainy day savings” is used a lot, but what does it actually mean and why is it so important?
Rainy day savings are also known as emergency savings, as it’s a pot of money that is there to be used when an unexpected cost or emergency arises. Everyone should prepare for these situations, it could be that your car needs a new tyre, your washing machine breaks, or you need to pay the excess on your insurance. They’re all payments that you wouldn’t expect to arise on a regular basis but when they do it is better to have the money saved and available to you.
Preparing for the unexpected not only takes the pressure off you when something does happen, it also prevents you from turning to forms of credit. It’s in times of emergency when people may be tempted to use a credit card or even go to a payday lender if they don’t have the funds available. Think about this; If you don’t have the money to pay at the time then how are you going to afford the credit repayments with interest charged on top? This can lead to people ending up in a debt spiral… this is why we are highlighting how important your rainy day fund is.
Starting a rainy-day fund doesn’t need to be difficult and it doesn’t need to be expensive. Save what you can afford, even if it’s only £5-£15 a month, it will all add up over time. Think about it… saving £15 per month could mean giving up a takeaway, or swapping your lunchtime meal deals for packed lunches, already after one year you’ll have £180. It doesn’t matter how small the amount is that you start with, just start!
The Money Advice Service suggests that it’s best to have your emergency savings to hand so that it can be accessed quickly and have the rest of your savings in a place which can make your money work harder. You can read more about this by clicking here.
We understand the importance of saving money and this is why we encourage all of our members to do it. We even encourage members to use their Member Account as their source of emergency savings, if it helps them to save up! Credit unions want what’s best for their members, and that’s help each and every one of them become more financially stable.