In a perfect world, we would always have enough income coming in to cover our regular monthly expenses as well as some emergency expenses. Unfortunately, unexpected circumstances can disrupt the best-laid plans. Rainy day funds provide resources for emergencies that, if unprepared for, can throw you off your path to financial wellness.
Setting up a Rainy Day Fund
- Budget: Include saving for a rainy day in your monthly budget.
- Rule of thumb: Accumulate 6-9 months of living expenses.
- Keep this money liquid: Consider cash and cash-like investments. Examples include savings accounts, checking accounts, money markets and certificates of deposit.
- Replenish the fund: Be sure to replace the savings when you draw from the fund.
Tips & Resources - Rainy Day Funds
- Remember that rainy day funds provide savings for both small, unexpected expenses, such as a dryer or car repairs, as well as for major catastrophes, such as job loss. Understanding how much you are reserving for each can help ensure you are comfortable with the amount you have saved.
This material is for informational purposes only and is not intended as investment, tax, financial, legal or other advice. Your personal decisions should be based on the recommendations of your own professional advisors.
Unless otherwise noted, websites referenced herein that are outside the www.cpg.org domain are not associated with The Church Pension Fund and its affiliates (collectively, the Church Pension Group) and the Church Pension Group is not responsible for the content of any such websites.