RSS Facebook Twitter LinkedIn

Featured Advisor

Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

Click to see the full profile

Share |

Financial Fitness Part 2- Let a Rainy Day Fund Be Your Umbrella

| BY Donald Liebenson

Rainy day funds present households with something of a Catch-22 dilemma. People may acknowledge the importance of earmarking savings for an emergency, but then they feel compelled to instead use that money to cover pressing daily expenses.

In a recent survey conducted by Millionaire Corner, a scant 2 percent said that not saving for a rainy day was their biggest financial regret. Those most likely to wish for a do-over in this regard were those ages 41-50 (5 percent) and households with a net worth under $100,000 (4 percent).

Yet not having enough money in their senior years, needing to work longer than planned to retire comfortably, and having to ask children for money were cited among their biggest financial fears. A dedicated rainy day fund could alleviate these concerns.’s May financial security index, a six-question survey that gauges how secure Americans feel about their personal finances compared to a year ago, finds that almost half (47 percent) feel about the same regarding the amount of money they have in savings. Just over one-third (34 percent) said they are less comfortable, with 43 percent of fathers with children younger than 18 also feeling less comfortable about their savings compared to 30 percent of other men.

The economy's stubbornly slow recovery is changing conventional wisdom on how much households should endeavor to save for their rainy day fund. Three-to-six months-worth of expenses was once the rule of thumb. Now, with 5.4 million Americans - up from 5.1 million - jobless for 27 weeks and up, and 8.1 million employed part-time for economic reasons, some experts are recommending having nine months to a year's worth on hand.

Some even recommend keeping a rainy day fund AND an emergency fund, one for unexpected setbacks such as car and house repairs and the other in the case of  job loss, medical emergencies or disabilities.

Painstakingly building a rainy day fund takes discipline, which itself could be a deterrent to dipping in to it for non-emergency uses such as a vacation. In addition to the obvious—control spending--experts advise adding contributions to the monthly budget, arranging for direct deposit of a portion of your paycheck and holding on to cash gifts or other windfalls, On the homefront, collect all spare change from the day to add to your fund.



About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.