Rainy day Fund|Reasons for having one and how to set one up in 3 easy steps.

Picture this you opened your laptop to work and you noticed your screen is cracked because you accidentally sat on it. Arghhhh! You are mad at yourself for sitting on it accidentally and you are mad because repairing your laptop wasn’t a part of your monthly budget. What do you do now? Do you go into your savings account you promised yourself you wouldn’t touch to retrieve the money you need?

Well this is were having a rainy day fund comes in.

Rainy Day funds

What are rainy day funds? I know when we hear rainy day fund we think (money umbrella) :

And you aren’t wrong. A rainy day fund is like a financial umbrella that covers you in times of financial distress. The rains when talking about our finances are those unplanned expenses that just pop up from no where. Of course you didn’t pen down laptop repair as a part of your monthly budgeted expenses but here you are looking at that laptop thinking about how you have to repair it asap. Since we are living life on a drawn up budget these kinds of expenses are very inconvenient for us.

A rainy day fund is similar to an emergency fund, I would say it’s the younger brother of an emergency fund. While emergency funds are for those huge emergencies or expenses like surgery, that come up unexpectedly. A rainy day fund or stash is for the littler ones.

Why do you need a Rainy day fund you may be thinking?

Well, the government has a rainy day fund for eventualities if the government of a whole nation have to have a fund set aside for such things why shouldn’t you? Rainy day funds are set up for the rare cases where you have to pay up an unplanned and unbudgeted expense. This fund is like a piggybank where you can deep your hand in and settle this expense without taking money out of your savings account or ruining your monthly budget.

We try to predict the future that is why we create budgets but the truth is the future holds alot of surprises therefore a rainy day fund gives you:

  • Peace of mind
  • Financial discipline
  • A safety net

Just the way we buy umbrellas anticipating the rainy days, we need a financial umbrella kept and ready in anticipation of the financial rainy days.

How to set up a Rainy day fund.

I have read alot of expert advice on how to set up a rainy day fund and although most of these advice are valid. However, for someone that earns little, actively budgeting and saving, these percentages experts talk about may only confuse you.

My advice

Step 1: Think of all your possible unplanned expenses that may pop up monthly.

Step 2: Write these expenses in a list

Step 3: Study your monthly earnings and divert a small percentage of it that you are comfortable with into a separate savings account for the rainy day fund.

Note: Some individuals prefer their rainy day funds in cash usually kept in a pot or piggy bank that they put in their closets. I understand why they would prefer this to make accessing it easily but for the sake of financial Discipline and accountability, it is advisable to have a separate savings account for this purpose.

Just like in budgeting, discipline is very important in setting up a rainy day fund. It’s a fund for unplanned expenses not a fund you dip your hands in to buy those cute shoes or pay for dinner at that fancy restaurant it’s not your “I deserve a treat fund” it’s your rainy day fund and should serve rainy day expenses only!

That said let’s move on to action shall we? If you don’t have a rainy day fund, set up one right now. You will thank me later. Since the percentage of our earnings that goes into our rainy day fund depends on the amount we earn and the expenses that may occur, how much do you put into your rainy day fund if you have one set up? And if you don’t have one set up do you think k you need one? Kindly leave your comments below.


  1. I had to share this on my Twitter today! This month I’d really like to improve my financial situation while dealing with a set back and this post helped me figure out where to start when it comes to a rainy day fund.
    Great read, thanks for the tips!
    xo BC


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