Unexpected expenses like parking tickets, minor home repairs, or a small financial hiccup can happen anytime and derail your budget if you haven’t planned for unforeseen issues. But a rainy day fund can help you deal with life’s mishaps without dipping into savings.
What’s a Rainy Day Fund?
A rainy day fund is “usually thought of as readily available cash savings to cover relatively minor unexpected expenses that come up in day-to-day living – without having to rush for the credit card,” consumer finance expert Kyle Enright, president of Achieve Lending, explained. “These expenses might include things like a repair on a needed appliance, a vehicle repair, or a trip to the doctor or urgent care not covered by insurance.”
Is a Rainy Day Fund the Same as an Emergency Fund?
A rainy day fund differs from an emergency fund, which is “meant for unfortunate life events that last longer than one day, usually more like months. Think of job loss, a chronic medical condition, the loss of your breadwinner, etc,” Jenny Groberg, CEO of BookSmarts Accounting and Bookkeeping, told us.
