What is a rainy-day fund
A rainy-day fund is a savings reserve set aside specifically for unexpected expenses or financial emergencies. This fund acts as a financial cushion, helping you manage unforeseen costs. By maintaining a rainy day fund, you can ensure greater financial stability and peace of mind, knowing you’re prepared for life’s surprises.
Things a rainy-day fund should be used for:
- Unexpected medical expenses.
- Job Loss to cover living expenses until you find new employment.
- Unexpected car repair
- Home repairs like fixing a leaky roof
- Emergency travel expenses, such as attending a funeral
Things a rainy-day should not be use for:
- Holidays: these should be planned and saved for separately.
- Non-Essential Purchases: Buying luxury items or non-essential gadgets.
- Regular Bills: like groceries, power and phone
- Spending on gifts, dining out, or entertainment should come from discretionary spending, not emergency savings.
Having a clear understanding of what constitutes an emergency can help ensure your fund is used wisely.
This information is of a general nature and is not intended as personalised financial advice. RIVAL Wealth is a Financial Advice Provider (FAP) licenced by the Financial Markets Authority to provide financial advice. Our disclosure document is located at rivalwealth.co.nz or a written copy is available on request
