Does everyone have a rainy day fund?

[2019holidays]

My income has increased by a couple of hundred a month and I found a short holiday in the sun at the end of the summer that this would cover.

However it's still a low income and while I would never struggle to pay bills/mortgage i drive a very old car and have quite a few jobs that need doing in the house.

A break would be lovely. But really I should probably be building up a rainy day fund. I can't figure out how much I need to save before I can justify treats.

I treat savings like every other bill. I wouldn't consider not paying the mortgage, the gas or the water. Nor will I skip on the savings. A set amount each month to buffer against life's inevitable hurdles.

Life is short. Buy the shoes.

I rarely have more than a few hundred set aside, and if I do it's usually for something. One day I'll have savings..... one day.

I did have a rainy day fund, but then a monsoon happened so it's currently very small & I'm building it back up again.
You never know when they will happen.

If you save it, you can always change your mind in a month & spend it anyway, but you might just realise you never really wanted the thing you were going to blow a couple of hundred pounds on half as much as you like knowing it's there for just in case.

Sorry for your loss watcher !
We have considerable savings because regardless of what people will tell you ,rainy days will happen . it’s just a question of when .
Think of your emergency fund as buffer between you and life . Once it’s in place , you’ll sleep so much easier knowing it’s there .
In your position I’d set up a standing order to a savings account for the extra £200 and think about a holiday for next summer .
You don’t have to spend money to have a good life .

Reckon 3 months salary might be a stretch but 3 months expenditure might be more realistic.

I'm assuming when the suggestion was first coined, it was made for people for whom those 2 things are the same

Life is generally not so short that your car might not need a major repair or your boiler break. Holidays are lovely but they're not nearly as relaxing as knowing you wont be torally up shit creek if there's a financial hiccup.

I agree with Barbarian on this, although I guess part of that is because I hate owing money, and would feel really stressed if I did (mortgage aside). I LOVE holidays, but in the lean years, that means a few days kipping on someone's floor in a different part of the country. I wouldn't be spending thousands seeking a holiday in the sun, if I didn't have the cash to cover an unexpected repair of boiler or car or replacement of fridge or washing machine.

I treat savings like every other bill. I wouldn't consider not paying the mortgage, the gas or the water. Nor will I skip on the savings. A set amount each month to buffer against life's inevitable hurdles.

I'm like this too. I've always had a standing order, on payday, in to a savings account. Yes, there have been periods in my life when I've had to take the money out again, but it has to be a 'conscious decision' to take the money out to be spent, rather than more casually using money that happens to be in my account. At that point I know I am choosing between what I want 'then' and what I am saving for - sometimes it had to be done, other times I've decided it isn't worth it.

I do and so should you.

Just a quick question; who should cover your expenses should you need it?

Life is generally not so short that your car might not need a major repair or your boiler break.

This is a really good point thanks. I'm talking as if they would be unforeseen emergencies when actually both my boiler and car are very old and repair or replacement would not be unexpected. Such expenses should be factored in routinely.

I could replace a washing machine or fridge but a boiler or car would be thousands. I think I can manage a modest holiday and get saving.

Our boiler is 25 years old (although still going strong!) so we have savings earmarked for when it gives up the ghost.

Yes they're really expensive.

I think life is about balance. So now you have extra money think about a sensible split between savings for essentials / unexpected and savings for living life (holidays, day trips).
I would probably split it more towards emergency savings to begin with and then relax once I had a bit of a buffer.

Using things like Tesco vouchers etc for treats works quite well for us. We paid for a decent chunk of our family holiday with Tesco vouchers this year. (Big family and it’s the only supermarket nearby!).

I also overpay the mortgage a bit each month which I see as a last resort rainy day fund (eg those overpayments would be a cushion in the event of redundancy or somethings but ideally they will help us pay the mortgage off sooner).

Oh and our washing machine died last weekend... not ideal with a newborn and two other DC. These things happen more often than you anticipate.

I have finally built up savings to cover if one of us lost our job. It would probably equate to around 4-5 months if either of us were out of work (we earn around the same).
Then there’s a separate savings account which was drained at Christmas.bbuilding it back up to hopefully cover a little holiday over the summer.
I do have debt on an interest free credit card. I’ve heard it’s better to pay off debt before saving but I wouldn’t be able to pay the mortgage with my credit card and it’s interest free so feels sensible...

Nothing would get me on holiday if I didn't have savings.

Life is terrifying enough without having some money to use in the event of an emergency.

There's no reason you can't do both but it does mean that either it will take longer for both or you need to downshift the brand so to speak.

So a cheaper holiday instead of one that costs £££ or a 6kg washing machine instead of an 8 etc. Or no holiday but instead a couple of nights close to home that's much cheaper this year with a view to saving smaller but longer for the next year.

Then next year once you have had a few months of not using (hopefully!) one of the pots you can look again at which pot gets what.

Watcher

I have 6 months salary saved in cash and then £12000 available interest free on two credit cards.

Getting a decent monthly saver account with some of it is a good idea. A few banks do good linked ones to their current accounts with half decent rates of interest (Nationwide for example). It means you are only locking the money away for a year and at the end you could use that for a nice treat and/or to spend on a bigger purchase (mine was set up as a new fridge freezer fund!).

Marcus Bank (part of goldman sachs) also have a really good easy access online account - 1.5% so still shite compared to the glory days of savings, but you can put money in or take it out with no penalties at all, so good to keep some savings in there for emergencies.

As someone that was unemployed for 6 months during a recession I definitely think 3 months is wise as a benchmark (luckily I got some redundancy pay), but I personally can't afford that at the moment. I'd think of it more as the average you should aim for.

I save £200 out of my take home wage of £1,200 per month. So save £2,400 a year out of £17k and think that's about my max limit.