Money saving ideasTips and advice

Do you save for a rainy day?

Piggy bank under umbrella to save money for a rainy day

This post has been commissioned by BM Savings.

With Olivia having started primary school and William beginning his pre-school sessions this month, September 2013 has heralded a new stage in our lives…and our pockets.

Both children have needed school uniform and for Olivia, this has extended into particular equipment and school-branded bags. It’s not like it’s going to be a one-off purchase either. My husband and I have come to terms with the fact that this will probably be a termly, or at best an annual expense. Yet another regular hit for our bank balance.

Piggy bank under umbrella to save money for a rainy dayThankfully, we’re big believers in putting aside any spare money we have for a rainy day. Having an account there for whenever you may need it can be so helpful and it’s heartening to know there are a whole heap of online savings accounts that can be opened easily – heck, more or less immediately – that will help you to do this.

Having a ‘rainy day’ fund is something we’ve always done, but the reality of why it can be so important really hit us in 2009. That was the year my husband was made redundant.

We didn’t see it coming and I was on maternity leave at the time looking after our newborn daughter. I informed my company that I wanted to return to work early, but still had to give them 28 days notice. It meant a month with limited money, a big mortgage and a new baby.

The first thing we did was to apply for any and all state benefits that we would now be eligible for (still very few). We drew up a budget and tightened our belts. Thankfully, my husband had received a redundancy payout. It wasn’t a huge amount, but it was useful to have in reserve. We also reviewed our savings account and was able to supplement our monthly income with a few pennies we’d squirreled away.

If you’re thinking of opening a general savings account – your very own ‘rainy day fund’ – I’d recommend that you think about your ‘return on investment’. Some accounts have good interest rates – good when you bear in mind that the Bank of England has said it’s unlikely that interest rates will rise from the current 0.5% any time soon – so definitely look around to find the best deal. Be warned though, that some of the better deals may come with conditions attached. You may be tied in for a specific period, unable to make any withdrawals for 12 months, for example. That sort of thing doesn’t work well when you consider that you never know when you might need your ‘rainy day’ savings. Personally, I like ISA and cash ISA savings accounts because not only do banks and building societies tend to offer good interest rates, these accounts are also tax-free and some can be flexible too.

Saving for a rainy day certainly helped to save our skin back in 2009 and I wouldn’t be without this sort of savings account. You never know when you might need to fall back on it. How about you? Do you save for a rainy day or do you prefer to live for the moment and spend your money as you get it?

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