‘Wold he haue me kepe nothing against a raynye day?’
No I’m not terrible at spelling, that’s the first recorded appearance in English of the phrase ‘saving for a rainy day’ which, according to grammarist.com, appeared in a book called The Bugbears way back in 1580.
The world has moved on significantly since the 16th century yet our modern-day anxieties remain, at heart, surprisingly similar to those of our distant ancestors. Health and economic survival would have dominated their thoughts and they continue to be sources of great concern to 21st century workers.
They had the plague, we have the coronavirus, their work was often precarious with little in the way of a state safety net and many 21st century workers find themselves in much the same situation with today’s job market unstable and state aid shrinking.
Chapman University in the US conducts an annual survey of America’s greatest fears. In 2018 the results revealed that 57% of Americans worry about not having enough money in the future, 57% worry about people they love becoming seriously ill and 53% worry about high medical bills.
It’s hardly surprising that the phrase ‘saving for a rainy day’ retains its place in our financial lexicon more than 400 years after it first appeared. We recognise the importance of putting something by when the going is good in order to have something to fall back on when leaner times come. But are you actually doing it?
In financial terminology this rainy day money is an emergency fund. And you should definitely have one to protect against potential future threats which will put you under increased financial pressure. That could be a myriad of things from falling prey to the coronavirus or having an accident that prevents you from working to losing your job.
Your emergency reserve needs to be kept apart from your everyday funds but easily accessible for when you might need it unexpectedly. Opt for a savings account with the highest interest you can find. The rate will be poor but for this particular element of your financial planning liquidity takes precedence over return.
If you don’t already have an emergency fund, make this your number one savings priority. Set aside a percentage of your income each month until you have amassed the equivalent of six months of essential expenditure. 10% is a good amount of savings to aim for if you can.
But it’s not just rainy days you need to think about with your financial planning. Your emergency fund is about planning for the negative but you also need to plan for the positive, setting aside savings for ‘sunny days’ in the future. You will have goals, such as building a house or buying a business, giving your child a fantastic education or retiring on your terms, and saving towards these is about sowing the seeds for a bright future.
If you can afford to, set aside an additional 10-20% of your earnings to save towards future goals. Some of us can easily afford to live on 70% of our income but if that’s a challenge for you, work towards your emergency fund first and then turn your attention to longer term saving. It’s going to require discipline, patience and self control but slowly and steadily building wealth is the only way to calm those anxieties about health and economic precarity, gain peace of mind and look forward to a sunny future.
And that future will be even sunnier if you choose where to invest your savings wisely. It’s all about balancing reward with risk and how you do that will be very personal to you. I can help you to get the most out of your savings and attain your financial goals more quickly by maximising return. If you’d like to find out more, why not contact me at firstname.lastname@example.org for a no-obligation appointment to assess your financial situation?
I have decades of experience in the financial services industry in South Africa. I worked for Discovery, the country’s largest insurer, for 16 years as a Specialist Consultant/Franchise Director, heading up many of their franchises, before moving to Regal, a leading financial advisory firm.
I decided to relocate and join Infinity in Ho Chi Minh City which would give myself offshore experience in the industry and satisfy my craving to explore a different culture.