Money Monday: Saving For A Rainy Day Fund

On Monday, Paul Hood from Hood CPAs joined News On 6 at 4 p.m. to share his advice on rainy day funds and how much someone should save for them.

What Is A Rainy Day Fund?

PAUL HOOD: There's things in life that you can plan for and things you can't plan for. So everybody's rocking along paying your bills and all of a sudden, you have something go wrong with a car or a medical issue, or you need a crown or whatever. Those things that are outside the budget. So people call them rainy day funds, I call them emergency funds. Experts recommend anywhere from 30 days to six months' worth of your income being set aside. A lot of people learned that lesson during COVID, you know, the people who got laid off, and then they didn't have a savings account, what are they going to do? It's really just fallback money if something major happens. The problem is that a lot of people will start that and then the major thing that happens is you know, they want to go out to eat or go on vacation or to see that new counselor. That's not what a rainy day fund is for.

CRAIG DAY: Let's say somebody's living paycheck to paycheck and they say they're struggling to keep their head above the water, what are some ways they can pay themselves first, so to speak? What's your advice to people who don't think they have enough to save?

PAUL HOOD: You said the key words there, they don't think they have enough to save, most people do not have an income problem, they have an outgo problem. The reality is that if people will take the time to sit down and pull 12 months' worth of bank statements, 12 months for credit card statements and see where their money is going. They're going to find out that they probably can save and it's proven if you save $100 a month, you can be a millionaire in about 30 years, so just do something.