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Get Your Money Right

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The Rainy Day Fund

Let's be honest; when it rains, it pours.

(A refurbished post. Not like Iphone 5s dropped in water refurbished though -- better)

Arguably one of the most vital yet neglected components of a solid financial foundation. The Emergency/Rainy Day fund is stash of cash, liquid assets, that can be used immediately in the event of an unforeseen circumstance. I like to think of my Emergency Fund encased in a glass container with large print reading 'In Case of Emergency, ONLY!' that must be broken with a bat.

Otherwise it may end up being spent on psuedo- emergency items such as a new wardrobe, a vacation, or (--insert your vice here--). Regardless of what you'd like to spend your emergency fund on, the reality and hard truth is that the purpose of it is to be spent on things you much rather not have to: essential car repair, necessities during unemployment, expensive trip to the ER. Emergencies.

So, how much should be in this fund?

"3 to 6 months living expenses" is the standard answer. I suggest leaning toward the 6 month amount.

Hypothetically, let's say it costs you about $1500 per month to finance your life. This includes housing costs, food, bills, routine activities, etc. Your emergency fund should have somewhere between $4500 and $9000 in a place where you can easily but reluctantly access it.

Who wants to have money and NOT spend it? What's the point of that? There is an old adage that says, 'It's better to have it and not need it, than to need it and not have it.' So, there's that.

Inadequate or non- existent emergency fund? Don't be ashamed. You are not alone. According to CNBC, 57 Million Americans have $0 saved for a rainy day.

But guess what? You will no longer be apart of that number! The purpose of our conversation is to change that. We want to become well equipped and financially secure. If you don't have an emergency fund or if yours is insufficient, work on fixing that TODAY. Set aside whatever you can. It doesn't have to be a large amount. The point is to develop a habit of consciously thinking about your finances in a way that keeps you, not the money, in charge.

You are as wealthy as your mindset. Marinate on that for a moment.

So if you have $1 to spare today and that's it, perfect. Set it aside. Don't go to the vending machine. Don't stop for fast food. Continue that practice every chance you get until your $1 is $100 and then your $100 is $1000. *Acquiring wealth doesn't happen over night. It is a series of repeated educated financial decisions continued over time (at least not for most of us-- if you've recently won the lottery and would like new friends to give your money away to; I'm accepting new friend applications via email at

For those of you who already have started an emergency fund, what tips and tricks do you use to motivate yourself to keep adding to it? Tell us at the same email used for new lotto winner friend applications or just in the comments below!

#personalfinance #emergencyfund