Life is unpredictable and full of surprises. Like when your car breaks down or your house needs a repair or when you fall skiing and need to get expensive surgery. These situations happen to everyone and sadly in 2020, it seems like a frequent occurrence. So it’s important to set money aside while things are going well, because at least if things go wrong, you’re prepared to deal with them financially. A rainy day fund can help you pay for these unexpected expenses.
Having some money saved for a surprise bill will give you peace of mind that you can afford to fix the issue without charging it to a credit card or taking out a personal loan. Both of these charge interest making the unexpect bill even more expensive.
What Is a Rainy Day Fund?
A rainy day fund is monies that you have set aside for expenditures that are outside of your normal living expenses. The idea is to use a rainy day fund for one-off expenses, such as a car or home repair, an unexpected medical bill, or that new phone you had to buy because you broke yours and never insured it.