Cause it will rain

July 5th, 2011

Playing in the rain

You can’t predict the unknown but most likely things will break down and the unforeseen will occur – it will rain at some point unfortunately. That’s why you need to open a “rainy day savings account” with at least three months worth of expenses. Sure you can use your credit card if an emergency occurs, but why pay unnecessary interest. If you organize your finances a bit it will not be that hard, trust me. Just follow these simple guidelines:

Keep your accounts separate

One way to keep your accounts separate is to open an online savings account. Not only do these banks offer higher rates than traditional banks, but your savings will be ‘out of sight, out of mind’. Some of my suggestions are: ING Direct, Smartypig and HSBC direct.

Assume the emergency fund savings is just another expense

Determine how much your true necessary expenses are (rent, groceries, utilities, etc. not Netflix or that nice dress) and then ‘expense’ for your savings. An emergency fund should be top priority in your budget and the amount you can contribute monthly should be fixed. In other words you cannot determine an amount from whatever’s left at the end of the month.

Automatically save from your paycheck

If your job offers direct deposit, don’t just use it for your checking account. Set it up with them so your desired savings go straight into your online savings account. Take it a step further and if you feel your lifestyle can handle it, once you get a pay raise (good for you!), have that increase go straight into savings as well. Ideally you should shoot for the moon and aim to save 50% of your paycheck. But realistically speaking very few people can do that. You need to push yourself but be reasonable so you won’t feel discouraged later on.

Think of it as power money. Not only is it a fund to cover emergencies, but it’s a fund that gives you the freedom to walk away from a bad situation. I find that empowering, don’t you?! Would love to hear your thoughts and strategies on how to save. Please share.


  1. carolina says:

    Seguidora…… me gusta Paulis!!!!!!!!!!!!! Buen trabajo.