Why would you want a rainy day or emergency fund?
Having rainy day savings means you're less likely to need to borrow money in an emergency or for unexpected expenses, when you need to access money quickly. It may help you to absorb financial shocks without affecting your savings for that much needed holiday or deposit for your new home.
How much do you need?
Everybody's circumstances are different and so you’ll need to figure out how much is right for you and your situation.
Some things to consider:
- How much does your life cost?
- How long would you need to cope if you had a break in income?
- Do you have any dependants?
- What potential crisis could pop up?
At the end of the day, this is your safety net, so build up enough rainy day savings for you to feel comfortable that you're prepared for what may arise.