If you’ve considered setting up a rainy day fund, you might not know exactly how much money to put in it. Saving with a plan in mind is always your best option, and using a rainy day calculator is often the best thing to do.
Learn more about these financial tools and how they can shape your financial future. It’s never too late to start saving, but you might need a little guidance along the way.
What Is a Rainy Day Calculator?
A rainy day calculator asks you the right questions and points you in the right direction. Comparing your goals to the suggestions an online calculator provides makes it easier to plan for the future.
Remember, too, that the rainy day calculator isn’t judging you. Be honest with yourself (and the technology) about your financial goals, how much money you earn and other aspects of your finances. You get better results when you are transparent about the state of finances.
How To Use a Rainy Day Calculator
When you use a rainy day calculator, answer the questions honestly. The calculator is designed to give you an idea of what you can do to save for the future.
Remember that not all financial calculators are the same. You might expect a complex calculator when you are determining how much a $250,000 mortgage actually costs with 5% down. In the case of your rainy day account, you’re determining what to save for and how much.
What Does a Rainy Day Calculator Tell You?
Online financial calculators break down a financial situation for you. For example, a mortgage calculator estimates how much a monthly mortgage payment will be, calculating estimated private mortgage insurance (PMI), taxes, principal, interest and homeowners insurance premiums.
A rainy day calculator looks at:
What kind of emergencies you can afford: The calculator asks you how much you make and whether you’re concerned about emergencies. It might also ask you about your debts or any activities you plan to save for.
What to save for: The calculator gives you an idea of expenses you might need to save for. This is especially helpful if you’re putting your money away without any goals in mind.
That you can start saving right away: A financial calculator often points you in the direction of a financial platform — like MoneyLion (NYSE: ML) — that will help you save for the future.
What Should Your Rainy Day Account Pay For?
While everyone’s financial situation is different, your rainy day savings account might pay for basic items that are both essential for your happiness and your survival.
Entertainment or vacations: If you know the sort of entertainment you enjoy most or vacations you wish to take, you can put away money ahead of time.
Unexpected expenses: While a rainy day fund isn’t necessarily meant to pay for emergencies, it might help pay for a few unexpected expenses that are beyond the range of your checking account.
Yearly expenses: If you must pay for a pool membership, joining the golf club, your child’s marching band activities or sports teams, you can save for those expenses every month, meaning that you are able to pay them off in cash as they come.
In all of this, you stop using credit cards for every expense, avoid paying high interest rates and always have the money on hand the moment you need it.
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About MoneyLion
MoneyLion is a unique, digital financial platform that has a simple goal: Help the 99% feel 100% about their finances. The platform offers several services to make that happen, including:
- Financial calculators
- Crypto and investment accounts
- Credit-builder loans
- Get paid early with RoarMoneySM
- Cash advances
- Mobile banking
- Cashback rewards
- No hidden fees
- Buy-now-pay-later options
Check the Rainy Day Calculator Today
If you need some direction when building your rainy day fund, use an online calculator, start a savings account and take control of your finances. If you want to take the process one step further, you can learn more from Benzinga and even invest as a way to grow your savings.
Frequently Asked Questions
How much do I need in my emergency fund?
Your emergency fund should be scaled against your monthly salary. In a perfect world, saving three to six months’ worth of salary is a good idea. However, a good goal is to save one or two weeks of pay. Additionally, you can save for specific expenses you know will come.
How are rainy day funds calculated?
Rainy day funds are calculated based on the items you might pay for — from entertainment and vacations to emergencies.
About Patton Hunnicutt
Patton Hunnicutt is a contributor and editor at Benzinga. He’s worked for several years on financial content, addressing issues related to personal finance, investments, retirement, and more.