Saving for a Rainy or Sunny Day
We all know saving money is important, but is it easier saving for a rainy day or a sunny day? I am a fair weather girl, so for me, it’s easy to save for a vacation, new car, or dinner out to celebrate a special occasion. I find it more challenging to set aside money – my hard-earned cash – for the air conditioning unit that may or may not break this year or, even worse, anticipating that I could lose my job or my dog could need abdominal surgery if he continues to eat everything in sight.
Of course, I do recognize that life can be unpredictable and the best made plans can be spoiled like a rain drenched picnic at the park. For this reason, it’s essential to work towards building a safety net to protect yourself in case of job changes, health issues, or other unexpected events. The general rule of thumb is that you should keep an equivalent of about six months of living expenses in the bank. Living expenses might include utility bills, monthly rent or mortgage payments, cell phone and data costs, groceries, and more. Make a list of monthly expenses, check it twice, and multiply the total by six. Yes, you do in fact need to have that much set aside to build your safety net.
Just think, if you set a savings goal such as putting away $150 every month (that is about one fewer meals out with your significant other or a friend every week), you could easily accumulate $1,800 within a year. Furthermore, having a bit of cushion when you need it can spare you the added expense of financing an emergency purchase through a high interest credit card.
So, what is the flip side to emergency savings? Think of it like this: Saving for a rainy day is good for when bad things happen; saving for a sunny day guarantees that good things happen. In fact, it’s helpful to have two separate savings accounts for this purpose – one for “life happens” and the other for “happy life.”
This mindset will create peace of mind as you anticipate expenses before they become a reality. Avoid living paycheck to paycheck by paying yourself first! Moving a little money each month from your checking to your savings accounts, or having a portion of your paycheck automatically deposited into your savings accounts through direct deposit, is an easy way to guarantee you have money when you need it.
How do you plan to use your savings to accomplish a “life happens” or “happy life” goal? Share your plans for rainy and sunny day savings by visiting @ACNBbank on Facebook. Good luck!
Laura McCusker is First Vice President/Community Banking Officer at ACNB Bank.