Life is often times unpredictable and no matter how much planning we do, there is usually something that will come and upset the apple cart. This is so much so in the family finances. It is always prudent to keep some money aside for a rainy day. This is not to say that we anticipate difficulties, but rather we be prepared, should they suddenly fall on us. Setting up a rainy day account is wisdom that will result in peace of mind knowing that should anything befall us, then we can be able to tackle it. In some cases, where there is financial prudence the rainy day account stays virtually untouched and this money is then available to be invested in other ventures.
Budgeting for an Emergency Account
When setting up an account to cover for emergencies always be realistic and not go overboard such that other financial obligations are strained. Such an account should be factored in family budget so that the percentage that goes into it is predetermined. Since this money should be accessible any time there is an emergency, it is not wise to keep it in an account with limited withdrawals and this calls for financial discipline so that it remains untouched otherwise.
Setting up an emergency account will call for certain adjustments in the previous budget. This may be difficult at the beginning but the benefits that this will present in future will far outweigh the initial discomfort. When this money has been saved for some time without being touched, a certain percentage can be taken out and used for either a family holiday or a present. This should only advisable after a number of years of saving such that a ten or twenty percent deduction will not have a major impact on the account so as to cripple it.