Why save for a rainy day
Saving money for a rainy day is an important part of healthy finances, however, many people wonder how saving some money for a rainy day will ever help them to be wealthy. They reason that saving money means you do not use it to invest, and thus with inflation, and the poor interest you get in basic savings vehicles, they are actually losing money, not earning it. While there is some merit to this, and while it is true that they can never save enough to have the kind of money they want, and if they are not investing it, or making it grow in other ways, that does not mean it does not contribute to wealth.
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The following are a few of the ways that saving for a rainy day will contribute to your wealth, and why it is important for healthy finances:
Saving for a rainy day is inexplicably tied to obtaining wealth. While the actual dollars you have saved for the rainy day may not help you earn more money, they act as a kind of insurance for the ones that you do have working for you. Saving for a rainy day means that when the rainy day occurs you have safeguarded your wealth. If you have a savings and you get injured and are out of work for a few days you do not have to mortgage your home further in order to meet your financial obligations.
Rainy days happen. They are basically inevitable, and while you can't plan for them exactly you can plan that they will occur. Cars break down, jobs are lost, accidents and injury sometimes happen. While it may seem the world is stacked against you, you have the ability to stack right back. You can depend on rainy days happening, so plan for them. Plan for the worst, and prepare for it, and when it does not happen you can be thrilled that you survived it the best.
So what happens if you do not save for a rainy day?
If you have no money set aside, and the worst happens, then you will have to get into debt in order to make ends meet, you will lose your home, or you will get in over your head, or some other unfortunate experience. Sometimes people justify not saving because they have a good job that is nice and secure. However, even if your job is secure, you could get ill, or injured and be unable to work. You may have a lot of debts, but a high enough income to justify it. What happens if you lose your job? What happens if your company suffers in a recession and has to reduce your salary or lay you off?
Put simply, you will never be financially healthy if you do not save for a rainy day, as it will be impossible to get out of debt, stay out of debt, and be able to stick to a budget with any sort of luck because life happens, and emergencies happen.
So, ensure you have a rainy day fund by putting aside at least 5 % of your income to emergencies, and another 5 % to normal savings.
