TRICKS TO BUILD A RAINY DAY FUND

Use unexpected windfalls

Have a plan where all those unbudgeted, unexpected cash inflows go straight in – everything from tax refunds and wages rises to work bonuses and birthday money from relatives.

Automatic debit on payday

Organise a fixed amount to be automatically transferred to a separate emergency account on the day your salary is paid. It becomes one of those unseen transactions which don’t even register and you live on what’s left over.

Target a luxury you can do without

Some estimates indicate that each household wastes at least 10 per cent of its income each month. Look for the money leaks in your budget, such as subscriptions you don’t need anymore, those lazy takeaway deliveries, the unnecessary extra… Use that money to build up your emergency fund.

Pad your account with dividend earnings

Build a share portfolio of good dividend stocks and deposit those dividends in your emergency fund. That way you’re building a nice investment nest egg and injecting cash into the emergency fund.

Collect spare change

Empty the change from your pockets, perhaps including the $1 and $2 coins (maybe $5 notes as well), into a jar at the end of each day. This works especially well if you use mostly cash. At the end of each month, add the contents of the jar to your emergency fund.