What some call a critical tool for financial security, a “rainy day fund” can help some older adults cover expenses in case of unexpected household or personal expenses.
The target amount to save varies depending on an individual’s expenses and risks but most financial experts advise individuals to save enough to cover three to six months of expenses in a liquid savings or money market account. Even having small emergency savings of $100 or $250 can be meaningful and serve to create peace of mind.
In some situations, using a home equity line of credit on an existing property or tapping retirement savings may be an optional plan. It’s also important, according to experts, to define what constitutes dipping into the fund to avoid spontaneous withdrawals that might be regretted later.
To start, set a realistic goal and adjust your account settings to automatically move the designated amount monthly into a savings account. Budgeting and tracking expenses can help create positive financial habits that allow room for saving. Even if it’s $25 or $50 that you have automatically transferred each month, you’re bound to feel better with something set aside.