Cape Town - Everyone tells you saving money for a rainy day is the wise thing to do. Here’s some basic info on the various ways you can get this fund together – and where to stash it.
Saving for a rainy day is not necessarily about long-term investments – that’s a different issue altogether. A rainy-day fund can pay for things such as unplanned repairs, or co-payments on the dentist’s bill.
Saving to see you through after a retrenchment is an emergency fund – and obviously involves bigger sums of money. Saving for your child’s education is also a long-term project. The rainy-day fund is adequate if it consists of one or maybe two months’ salaries.
It’s saving for a deposit on a second-hand car if your current car is wrecked, to replace an appliance, or to have the cash to buy a plane ticket if your mom falls ill and you need to get to her quickly. It’s saving to have the funds on hand if you suddenly need to pay R1 500 in insurance excess after the geyser has burst.
It is always a good idea to speak to a financial adviser before making decisions about where to save your cash.
What you need to consider
· What amount do I need?
· How quickly do I have to be able to access the money in an emergency?
· Are there any costs involved?
· What are the risks?
· How easy will it be for me to use the money for something else, which might not be an emergency at all?
· How easy will it be for me to skip a payment if things are a bit tough?
Here are some pros and cons to a few options of saving your money (and remember, financially they all make more sense than borrowing the money when a sudden expense hits you):
* July is Savings Month. Help us help you. If you have a successful savings plan or story to tell? Share it with us now.