Unfortunately, Saving For A Rainy Day Does Not Always Work
The old rule of thumb was that you should aim to have at least three months’ salary set aside for emergencies, but nowadays it seems most people are struggling to save three weeks wages, let alone three months. Families in the U.S. still don’t have a substantial amount of cash tucked away for a rainy day despite the beating the economy took in in 2008-2010.
The Financial Security Index from Bankrate.com shows half of American families have no savings or less than three month’s worth of expenses saved for emergencies. The survey’s findings, analysts note, haven’t changed since 2011, when the company first began inquiring about the saving habits of American families.
Some of the events which now constitute a rainy day for many people are surprising. Paying a large shopping bill, car insurance premium or energy bill, for instance, aren’t things that come out of the blue, so although they can sometimes be higher than expected good budgeting should prevent these sorts of expenses putting a strain on your finances.
So if Saving for a Rainy Day isn’t working for you, try living for a Sunny Day. Sign up for Suntrust’s Shine newsletter to receive money inspiration and motivation to help you achieve your goals and live for a sunny day! Go to Suntrust’s Resource Center to learn more.
What is a Sunny Day? It’s the feeling of optimism, confidence, and control around your money. It’s a moment in life when a goal or aspiration becomes a reality.
Here are 3 simple steps you can take to live for a Sunny Day:
1. Pay your bills as they come in, and not charging more than you can afford
If you have balances on other credit cards, it’s best to pay off those balances before making any new credit card purchases, especially if you’re already having difficulty making payments. If you make a $1,000 a month it is probably not a good idea to go and buy a $750 pair of shoes. Be smart with your money.
2. Sock away money regularly for retirement, perhaps via a 401(k) plan at work
With a regular 401(k) plan, money is deducted from your paycheck before taxes are withdrawn, which lowers your taxable income and therefore, lowers your taxes. Some plans allow you to contribute money on an after-tax basis as well. Check with your financial advisor for cases when this might be advantageous in your situation.
3. Set up an Emergency Fund to pay for unexpected big ticket expenses
Most experts advise building an emergency savings fund large enough to cover three to six months of your expenses. In this down market, it’s best to aim for six months. To calculate how much emergency cash you’ll need, add up all your monthly living expenses and multiply that by the number of months you want to cover. You should also include cash for emergency expenses and insurance deductibles. Odds are this is a pretty hefty amount, but you don’t have to have all that money right off the bat. It can take a few years to build a proper emergency fund, so give yourself a little time.
At SunTrust Bank their purpose is lighting the way to financial well-being. When you feel confident about your money, you can save for your goals and spend knowingly on what matters most to you. They know we all live for the sunny days and want to you help you live yours.
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Want to get your sunny day started now? Visit the SunTrust resource center anytime for help achieving your financial goals.
This is a sponsored conversation written by me on behalf of SunTrust. The opinions and text are all mine.