Saving for a Rainy Day

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Saving for a rainy day implies that you are saving money in case some significant unexpected expense pops up. The majority of American families live just above their means, meaning that their paychecks go directly into the mouths and onto the backs of their families. Many families do not feel that they have the ability to save money and put it aside for something unexpected. In many families, that’s what credit cards are for.

However, at a basic interest rate, an average American family can take $50 and place into a moderate return savings account of about 5%. Several online bank accounts actually offer higher returns. With the interest re-deposited back into the account, and the account never touched, and the $50 placed into the account religiously, in 20 years that account will reach $1 million dollars. This is absolutely true. I was told this one time and I didn’t believe it. But I sat down and did the math and it is in fact a very true statement. How hard is it to save just $50 per paycheck? Unfortunately for most it is really very difficult.

Placing money aside in a bank account that remains untouched is one of the best gifts you can give your family. It is money that can be there for an emergency or money that can be set aside and not touched at all for any reason. If a parent can afford it, placing just 50 per month in a savings account for their child would allow that child to go to the college of their choice, provided the interest rate was a bare minimum of 5% and the interest was placed back into the account. Readjusting the family budget may create a few unrealized savings that went previously undetected. Is there a smoker in the household? Quitting smoking is great for your health and really really good for your pocket book.

Unfortunately, the better quality and higher nutritional and health value in food the more expensive it is. This seems really backwards for a society that is plagued with obesity, but saving money by buying less expensive foods has health pay offs that aren’t worth it. Saving money by turning the heat down a few notches and insisting people wear sweater and socks is not unreasonable. Even just three degrees can save as much as $25 per month, depending of course on the type of heat used and the size of the house. Turning the refrigerator back two notches and opening blinds during the day can seriously cut down on energy costs. This may help you find around $10 extra dollars a month to set aside.

Keeping your car engine clean and the oil frequently changed is an excellent way to save on gas. Engine cleaning additives can go a long way in improving engine performance, along with a clean air filter, which can save as much as 3% in fuel costs. At $2.75 per gallon, 3% can add up in a nice little extra kitty. Walking or riding a bike whenever possible also helps cut down on gas expenses as well as the spare tire.

Finding these small expense savers can really add up for a family who is struggling to find money for saving for a rainy day. It’s not easy with kids who need one thing after another and the rising cost of living and the battle for reasonable wages. Of course, families who make a healthy living don’t always save properly either.

It is not uncommon for a family who makes between $100,000 and $200,000 to be utterly broke. For those of us who are not quite in that income bracket, that seems nearly impossible. It is quite common that those with higher levels of income live at a higher standard, meaning that they often are financed to the point that they do not have money, or much money, to save for a rainy day. Our society is geared toward spending what you have, thus whether you live off $1000 per month or $10,000 per month, it is likely that you are financed to the max. It is suggested by financial experts to attempt to live below your means. Instead of opting for a $300,000 home, purchasing a home for $150,000 can allow for better upkeep and home improvements while maintaining a larger cash flow.

If any family can learn to consistently save 5 to 6% of their monthly income in a “no touch” savings account or low risk CD, they are likely to have the necessary funds for emergencies and even non emergency items as the needs arise. Saving for a rainy day is an intelligent practice that was once much easier to do. The cost of living sky rocketed in the eighties, but the wages and earning brackets never really caught up. Regardless, with a few small principles of saving, almost any family can put away $50 per month for their rainy day.

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