How to Build a Rainy Day Fund?

If the COVID-19 has thought us something about finance is that having access to savings is of utmost importance when facing uncertain times. According to a survey, 70% of Australians said that they could have done better to improve their financial situation before the pandemic so that they were better prepared for the unexpected.

With that in mind, the leading accountant firm offering the ultimate financial assistance services in BrisbaneSyndeo Accountants – has come up with the following steps to help your savings grow:

1. Determine Your Saving Needs

First of all, you have to carefully consider how much exactly you need to save to feel comfortable with your financial position in case of an emergency. Although it may be tempting to live to your means every month, the truth is that without access to cash you may end up using high-interest credit cards. Eventually, your household’s cash flow may be disrupted and long-term financial goals delayed.

Therefore, start by determining your saving needs and put money aside for the rainy days. According to expert accountant firms, you should have enough savings for at least three months of rent and daily expenses. Plus, at least 25% of your annual income to cover retirement and large purchases.

2. Start Small, but Think Big

Next, transferring huge chunks of cash towards your savings fund immediately isn’t a logical solution as by the end of the month you will have to take away money from the same fund to be able to cover daily expenses. Instead, you should start with small goals and grow over time. You could set yourself an expense budget and cut back a bit from your current expenses. Alternatively, but definitely the best solution, seek professional financial assistance from an experienced accountant to provide you with the utmost advice on how to organize your money.

Yet, even though you should start small, you have to consider your long-term financial goals. And, as soon as you build your rainy day fund, you should continue saving for retirement, holidays, new home, new car, luxuries, or anything else that’s been long on your wish list.

3. Keep Your Rainy Day Fund Accessible, but Out of Sight

Finally, you have to ensure that your rainy day savings fund is accessible at any time as you don’t know when an emergency will strike. That said, although a savings account offers a greater return when it comes to interest payments, transaction fees or delays wouldn’t be convenient in case you need to access the fund on a day’s notice. Thus, ensure you talk to your financial assistance provider or bank about the best solution.

In addition, while making sure your savings fund is accessible, you should also ensure that it is out of sight so that you aren’t tempted to use that money for something you don’t really need. For example, financial advisors recommend having your rainy day fund in a different bank, or if you have a card for that account, keep it at home and out of sight, not in your wallet.

So, as bad luck can strike when you least expect it, it’s high time you start building your rainy day fund. But, if you want to ensure a healthy future financial situation, contact Syndeo Accountants today and get the number one financial assistance in Brisbane.