A rainy-day fund can be a great addition to your finances, providing you with the help you need to turn a potential downpour in a drizzle. Here are four key benefits of having an emergency fund in place.
Keep your budget on track
First and foremost, a solid rainy-day fund can help you keep your finances in good order – no matter what life decides to throw at you. Most importantly, it creates a money buffer when everything seems to ‘happen at once’.
A high winter power bill or a broken window may be smaller costs individually, but they have the potential to add up and blow your budget. So if your budget is ‘tight’, protecting it from unexpected costs is always a good idea – this way, you most likely won’t need to touch your retirement funds or hold off on other financial goals.
Saves you money
While it sounds obvious that having a rainy-day fund means you have saved money, having this financial ‘first aid kit’ can help you save even more.
Think about insurance, for example: if you have a nice nest egg tucked away, you might be able to choose a higher excess or a longer waiting period – reducing the cost of your premiums for the same level of coverage, and saving hundreds over time.
But a rainy-day fund is not just a great source of financial support. Savings accounts also attract interest (albeit a small rate), meaning you are receiving money as a ‘reward’ for keeping your savings in a financial institution account. While it may not seem like much, savings can add up and compound, creating an even bigger financial ‘umbrella’ for those rainy days.
Your rainy-day fund can give you peace of mind that, if ‘what ifs’ happened, you and your family would have it covered.
Unfortunately, family emergencies tend to happen at the least opportune times. But by having an emergency fund in place, you can act faster and help your loved ones in their time of need, without putting an immediate strain on your pocket.
What would you do if your fridge suddenly broke down? While your first thought may be to have it repaired, depending on the age of your appliance, it is sometimes cheaper and more cost efficient to replace rather than repair.
Whiteware can be expensive to replace but it could save you money in the long run, as newer appliances tend to be more energy-efficient. You could put the savings from your power bill back into topping up your rainy-day fund.
We are in your corner
Life is full of the unexpected, but having an emergency fund may help alleviate the stress and worry associated with it. You can’t put a price on the peace of mind that it provides.
And remember: when it comes to more planned purchases and other financial needs, a personal loan can be an affordable solution. Talk to the team at AA Finance about your personal loan needs today. Contact us on 0800 500 555, seven-days week between 9am and 5pm. We’re here to help.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.