Do you have a rainy day fund? If not, you really should. A rainy day fund is a savings account that you can use in emergency situations, such as if you lose your job. As a rule of thumb, this fund should contain enough money to cover around three months of your usual expenses until you get back on your feet. To make sure you have this security net to fall back on, take a look at this quick guide to building a rainy day fund.
In order to generate an attractive sum of money for your rainy day fund, you first need to be able to save. For those of us who are struggling to make ends meet each month, having money left over for savings seems impossible. This is why budgeting is such an important element in building a substantial rainy day fund.
There are lots of tools out there to help you get to grips with budgeting. The Money Saving Expert, for instance, offers a downloadable excel spreadsheet featuring an in-depth budgeting plan. This way, you can track every part of your spending habits, calculating how much money you should be left with after your outgoings. Doing this will give you more clarity on the things you spend your money on, identifying opportunities to cut costs and put the extra cash into your savings.
One of the best ways to increase your income is investing. Of course, usually, you need to already have a good grip on your finances in order to do this. Investment methods like property investment can require an upfront cost if you’re using a buy to let mortgage, while some companies prefer their investments to paid in full. If you have a separate savings account with enough funds to cover investment costs, it could be worth thinking about investing your money.
If you think this is a good route for you, look for investments with the lowest risk. Property investment tends to be less risky than other investments like stocks and shares, provided you do your research and make good decisions. Start by finding a trusted company such as RW Invest, who offer help and guidance on the most beneficial opportunities. Good property investments tend to focus on locations with the highest rental yields, the best rates of house price growth, and the strongest rental demand.
Sell unwanted items
If you don’t have the kind of money needed to make successful investments, then you’ll need to find other ways to generate some extra cash. Selling your unwanted items might not sound like something that can make you a lot of money, but you might be surprised the price people will pay for your pre-loved clothing, accessories, furniture, and more. Root through your wardrobes and cupboards to find items you’re happy to part with, and dedicate some time to creating some quality listings on sites like eBay, and with apps such as Depop and Schpock. Putting the extra time into taking high-quality images and writing detailed descriptions could help you sell your products for higher amounts, allowing you to increase your rainy day fund in no time.