How to build up a rainy day fund

While planning ahead can help you to factor irregular expenses and bills into your budget, some costs are difficult to predict. Your fridge could stop working a year after warranty, or your child could chip a tooth in the playground when you’ve reached your limit of dental spending, for example.

This is where a rainy day fund that you can easily draw money from can come in handy. You are able to cover unexpected costs without going into debt or sacrificing other items from your budget. But how do you build a rainy day fund? This guide should help you with that.

Figure out how much you need

Start by thinking about what you might need to dip in to your rainy day fund for to work out how much to have it in. If your fridge broke down, how much would it cost to replace it? Or if your relatives live overseas and get sick, how much would flights cost to visit them?

Here are some examples of expenses that your rainy day fund could cover.

• Unexpected home repairs
• Major appliances that have broken
• Medical bills that cost more than you anticipated

2. Start saving into your fund

It’s a good idea to open your rainy day fund as a separate account so you don’t spend this money on every day essentials or draw down your one day savings.

Look at your budget to work out how much you could add to your rainy day fund each pay cycle, then use a savings calculator to see how long it will take to reach your savings goal.

If you have a NetBank Saver or GoalSaver account with CommBank, you can set up your rainy day fund by using the CommBank app.  Just tap on your saving account to create a goal for your emergency fund. 

3. Define when you will use it for you

Rainy days happen quite often, so it’s likely you will need to dip into this account on a regular basis.

You can set up recurring payments to go from your every day account once you get paid you so can keep it topped up even after you have used it.

Once you have built your rainy day fund, start building up your emergency fund, which will help you to recover from major unexpected expenses or more serious events such as a major illness.