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Families are expensive, and in the current financial climate, life is expensive. Increasing numbers of people just about scrape by, and some are struggling to get out of debt. Even if you think you’re doing okay, something could come along out of the blue to put your finances in jeopardy. You or your partner could be  suddenly made redundant, or your boiler could break. Any number of things can happen to add an extra burden on your wallet. To protect your finances and your family set up a rainy day fund.

A rainy fund is your get out of jail free card. It’s your insurance against the unknown. If the worst happens, you have peace of mind if you have a little set by to help you.

No Amount Is Too Little

The first thing to make clear is that no amount of money is too little. Even if you can only spare a few pounds a month, this will mount up over time. Make sure you keep your fund separate to your regular savings and don’t be tempted to dip into it.

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Freeing Up Funds

If you’re struggling to make ends meet, try to free up money from other areas to add to your fund. There are many ways to go about this. Start by looking for changes with a high reward but a low impact on you and your family. For example, money from a PPI claim could be considerable, but it won’t cause any hardship. This could be a significant boost to your household income, and it could be split between your everyday savings and your fallback fund.

Other areas you can make savings are your household bills. Get rid of anything that is no longer useful. That lapsed gym membership is taking up funds that could be redirected elsewhere. And it’s worth negotiating your utility bills. The savings that can be made mount up and could be the equivalent of a small salary bump.

Once you have overhauled your expenses, it’s worth considering your everyday spending. These are payments you make on a regular basis without much thought. A useful exercise is to write down everything you spend for a week. This includes cash as well as card payments. Going through this process can be a humbling experience, and it’s possible to find areas where savings can be made. For instance, your daily coffee from the local barista is costing you around £10 a week. That’s £520 a year. It’s not about depriving yourself. If that coffee is something you look forward to, find a cheaper alternative such as making your own in a travel cup.

Other expenses that mount up include buying sandwiches for lunch and purchasing soft drinks and bottled water. Again, there are savings to be made if you take your own.

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Bad things happen to good people all the time. Despite your best efforts, people fall ill, accidents happen, and companies fold. The trauma of these events is bad enough, without added financial worries. Establishing a rainy day fund could protect you and your family during a difficult period. And there’s no cost you can put on peace of mind.