Building A Rainy Day Fund

How can you prepare better financially for unpredictable events? Angela Joell, Client Financial Wellness Manager, shares her experience on advising others about rainy day funds and suggests ways to start building your own.   

Rainy day fund

One of the best things about my job is giving people guidance on their financial well-being. This often means explaining lots of technical procedures and paperwork, but the irony is the best advice I can offer people looking to improve their financial wellness is also the simplest. It’s a piece of advice I give so often, I can recite it in my sleep: If you don’t have a rainy day fund, start one today.

Life isn’t always predictable, and we’ve all experienced our fair share of unexpected events. COVID, anyone? A sudden emergency doesn’t have to be a worldwide pandemic, however. Imagine this scenario. Two friends work at the same company and have similar financial portfolios. However, one has a rainy day fund where they deposit a small amount of money each paycheque and the other does not.

After a few years, their company experienced a round of layoffs and both are out of the job. Friend One, who has been building their rainy day fund, has the option to withdraw the money to help with their transition into a new role. Meanwhile, Friend Two, through no fault of their own, may have to look for other options to help with the transition.

This is only an example, but it shows how a rainy day fund provides many long-term benefits. It does not matter how much you put away. The most important thing is to start and stay consistent.


You can start your own rainy day fund in 3 easy steps:

Step 1: Open a Separate Dedicated Account

It’s best to have an account separate from your usual spending accounts. Make sure it’s not associated with an existing ATM card, automatic billing, or other quick payment methods.

Step 2: Setup Automatic Deposits

Setup an automatic transfer of funds from your main account to your rainy day fund. My advice is to start at 5% of your net income each month.

Step 3: Make it Easy to Access

Ensure the account is one where any amount of money can be withdrawn within a 30-day period. You don’t want the amount of funds you can withdraw be limited in an emergency.


Saving One Step At A Time

Over time, you may be surprised to discover there are not as many events calling for your rainy day fund as you think. The longer you go without withdrawing, the more financial support you’ll receive if an emergency does occur.

Need more advice on planning your rainy day fund? Contact us to work on the best way you can build wealth and savings long-term.

DISCLAIMER: The content in this article is for informational purposes only and is not intended to be a substitute for professional financial or investment advice.