Rainy Day Funds: Don't Let a Tire Flatten Your Bank Account
Now that all the introductions are out of the way it’s time to get down to business. It’s no secret that most people in college and those recently departed, “the newly independent bunch,” are in one way or another handling their money day-by-day. Your main concern is paying for those nights out and all the other entertaining things you want to do. I mean that’s what we work for right? While it’s important to enjoy yourself and your money, you need to be prepared for the unforeseen things that life throws our way.
When I came back to school from my winter break, I found my car with a flat tire. I was pissed. I had just paid to repair the tire the day before I left for break. When I had the tire replaced, I was informed that the other tires were close to the end as well. This came as a shock considering the tires were well within their warranty. I had no choice but to go ahead and replace all the tires because winters in the Appalachian Mountains are probably better suited for snowmobiles, so good tires are crucial for any sort of survival. Boom, $350 (after warranty) down the drain to tires. Freakin’ tires.
You never think much about these little things that fall apart or need repair because you just expect them to work. When they don’t, all hell breaks loose in your bank account if you’re not prepared. Another example that everyone living in this century can relate to is when those pesky iPhone screens break into a thousand pieces after a seven inch drop. And just like that you’re out $100. So how do we prepare ourselves for these monetary tragedies?
Expect it! Something will go wrong and you will need money. An emergency fund is necessary. Many financial experts will tell you that your emergency fund should be able to support you without a job for six months, but I’m going to be realistic with this group because telling you to put away six months worth of funding may leave you rationing off body parts to have that type of stability. Being the group that has recently been thrown into the harsh realities of the real world, we need to understand where we are with our money. While six months of living expenses is probably out of the question, having money set aside in a rainy day fund for something like tires and phone screens should not be.
Just being aware that you need to put away some money is a good start--you’re already further along than most people your age. The next step is figuring out where you’re at financially, your cash flow, expenses, and how much can you put away in savings. It is different for everyone, but I guarantee you, you can spare money for a rainy day fund. After you have figured your amount, set aside that money first before you handle your other expenses. If you don’t save it up front, then there is a decent chance the amount you’re saving will be inconsistent and eventually will turn into no savings at all. We can manage saving a little money for that rainy day fund every pay period.
I will go deeper into money saving strategies in later posts, but this is a good start that needs to be put into action right away. The truth is, it’s going to hurt no matter what, but it will hurt a lot less up front when you decide to save rather than when that dark day comes around and you check your account to find out it’s empty. Take control now and start preparing for that next flat tire.