Life has ups and downs. While staying positive is the key to fighting off all the impending financial challenges, staying prepared for any unpredictable financial storm is important. You already have heard about the massive layoff that took place in 2023 right? The effect is still there! Around 85% of people in the UK live in constant fear of job loss after the global pandemic.
We hope and pray that nobody ever needs to encounter such a phase in life. But the future is unforeseeable. Time can occur when you wake up just to receive a call from your workplace stating that they no longer need your service, can you manage to bear all your household expenses till you find a new job?
That’s why financial planning and having a rainy day fund is important. By using the best budget app, you can track your daily and monthly expenses and keep aside some money in your rainy day funds for unforeseen days.
What is a Rainy Day Fund?
A rainy day fund is just like another emergency fund. You can create it to meet your unplanned financial needs unfailingly. The fund plays the role of your financial safety net, protecting you and your family during your financial hardships and income loss.
The FCA stats read that around 34% of UK adults either have no savings or less than £1,000 in their savings account. However, this amount is not enough to handle an unexpected financial crisis, especially when you have a big family. The reason behind it is poor financial management and expense tracking skills. However, this needs to be taken care of seriously considering the sudden job loss status in the UK and across the globe.
But, for a stress-free lifestyle even during a financial crisis, an individual should have savings of at least 1000 Euro to 2000 Euro. By fruitfully using a money budget app, you can easily create a rainy day fund and stay prepared to handle an approaching financial storm.
How to use a Budget App to save Money on a Rainy Day Fund
The best budget app comes with excellent features where you can set a savings goal, keep track of your spending, and keep aside a chunk of money to use in an emergency. Go through the following tips to create one:
1. Track your IncomeÂ
To create a successful rainy day fund, you first need to carefully asses your monthly income and spending. For that, connect your budget app with your bank account and credit card to let the app automatically track your spending. For more precise calculations, you can manually upload your receipts. This way, you can check all your monthly spending in one place.
2. Analyze Your SpendingÂ
Every month, your money budget app will show you the report of your expenses in a graph or chart. Scrutinize it cautiously and cut off all the non-obligatory expenses like any OTT subscriptions, impulsive purchases, etc.
3. Create a Rainy Day Fund and Set Auto-TransferÂ
The best budgeting app lets you enable the auto-transfer facility. When you will enable this feature on the budget tracking app, it will schedule an automatic transfer of a certain amount from your bank account to the rainy day fund created in your budget tracking tool.
So, create your rainy day fund, and set a specific amount that you want to be transferred each month to your fund. You can even schedule a fixed date for the automated transfer. It is better if you choose a date within the first week of your salary credit day.
4. Plan a Savings Goal
If you can save about 3 to 6 months of living expenses in your rainy day fund, you can take care of the basic needs of your household consistently. Most budgeting apps integrate an in-built savings feature, where you can set a target amount as your savings goal.
5. Monitor Your ProgressÂ
Make the best budgeting app as your daily companion, and track your expenses, investments, and rainy funds to monitor your progress. One more thing, don’t stop if you see your rainy day fund has reached your preset savings goal. As much as you can save, you can stay relaxed until your financial situation goes back to normal. If you have accomplished your goal, you can set a lower amount for the auto-transfers. However, make sure to refrain from spending money from your rainy day fund.
Wrapping Up
A financial storm can arrive upon you in any form. Here, we have taken sudden job loss as an example, but it can be anything from a medical threat or another pandemic. When you have a rainy day fund, you are ready to face any challenge with ease. Well, building a rainy day fund is not easy. It needs patience, time, discipline, and the best budgeting app. Without a budget app, it’s next to impossible to save money and resist the urge of unnecessary spending. Don’t make any more delay, choose your budget tracking tool and start saving today!
