Rainy Day Fund???

Avogirly

Hi all,

I'm sure this has probably been answered a million times before, but I would really appreciate your opinions on this train of thought.

I'm currently receiving a daily email from YNAB (You Need a Budget) on their 9 day short course an introduction to budgeting. Today (day 8) the email consisted of a system of living on last month's income.

The theme goes by the method of cutting back all outgoings to the bare bones (and I do mean bare bones) for as long as it takes to build up a reserve of what is the equivalent of one month's salary. My understanding is to cut back on everything, including debt repayments, until this buffer is built up and then you can budget with a better frame of mind and reassurance that you have something to fall back on should the proverbial hit the fan.

Now, I budget for everything, say the dog needs his vaccination, I have that saved. I have read that you shouldn't have savings whilst in debt and that I understand and agree with completely. But should I have an amount saved for a black day?

Also, what would you think would be a suitable amount to have?

Thoughts please fellow DFW's.

Tixy

If you have savings pots for all likely/potential outgoings over a year then personally I wouldn't put a huge amount in to an emergency fund if you are repaying significant debts.

Do you have access to any emergency credit? (i.e. a credit card with unused limit that you could use in a real emergency). If you do then I think that reduces the need for an emergency fund a bit.

Avogirly

Hi Tixy,

Thanks for this, yes I had read on here that some use credit in case of an emergency.

I'm really interested on different opinions. I suppose you could say it's down to how much risk you are willing to take.

FireWyrm

It depends what you mean by a SHTF fund. I budget for everything too, but I dont budget for rebuilding fixing my house after a hurricane. This is because such emergencies are simply too rare to really plan for short of having longer term plans than YNAB can cater for. If your YNAB budget is really robust and it sounds like it is, you have already covered most eventualities and need not obsess any further since you are already well ahead of 99% of the populace.

Avogirly

Also, another point to add to this (sorry!) does your views change once you have dependents. Being currently pregnant, should I do things slightly differently once the baby is here?

Avogirly

FireWyrm wrote: »

It depends what you mean by a SHTF fund. I budget for everything too, but I dont budget for rebuilding fixing my house after a hurricane. This is because such emergencies are simply too rare to really plan for short of having longer term plans than YNAB can cater for. If your YNAB budget is really robust and it sounds like it is, you have already covered most eventualities and need not obsess any further since you are already well ahead of 99% of the populace.

I am the same as you FireWyrm, I try and cover everything too.

Toomuchdebt

I don't currently have anything in place for an emergency I have a grand total of £10 in a savings account-I've been so focussed on the debt that I didn't think of rainy days.I don't like this feeling though so am trying to build it up to £500.Ideally I'd like an entire months income in there(as well as the YNAB buffer) possibly 2.

FireWyrm

Avogirly wrote: »

Also, another point to add to this (sorry!) does your views change once you have dependents. Being currently pregnant, should I do things slightly differently once the baby is here?

In what way?

Have you made provision for the additional burden on your finances? Personally, I spent most of my first pregnancy buying a packet of nappies or two extra a month as well as sleep suits and cans of milk. Although I was adamant that I was going to breast-feed I was realistic enough to at least acknowledge the possibility that it wouldnt be possible. Even if you are going to breast feed, it makes sense to have a can or two of milk handy for that inevitable 2am feed when you are down for the count and cant take it a second longer. Believe me, hunting for an open shop at 2am on a winters morning isnt funny - or it wasnt back then before supermarkets started opening at stupid hours.

The nappies are a sensible option if you arnt going for washables.

Beyond that, what do you imagine you need extra that you have not already bought, been given or will be able to pick up on freegle?

Avogirly

Thanks FireWyrm. I have picked up a few bits as I've been going through my pregnancy and I am actually planning on using reusable nappies when at home and then disposables when out and about and also for night. Plus I have got a baby budget, putting a little aside for the baby each month. I've been reading up about having a baby on a budget and what little we are actually going to need at the start. I just wasn't sure whether your mindset changes once you become responsible for another.

Avogirly

Toomuchdebt wrote: »

I don't currently have anything in place for an emergency I have a grand total of £10 in a savings account-I've been so focussed on the debt that I didn't think of rainy days.I don't like this feeling though so am trying to build it up to £500.Ideally I'd like an entire months income in there(as well as the YNAB buffer) possibly 2.

I suppose you gauge it as to how confident you are in your budget. I am just beginning the process of using YNAB and am happy with how they are progressing. But it's that security I suppose....

FireWyrm

Avogirly wrote: »

. I just wasn't sure whether your mindset changes once you become responsible for another.

It does and before you know it, you'll have school uniforms, clothes and the neverending round of shoes to pay for. Best to start now :rotfl:

As for washables, I use them and dont even have disposables in the house. I use totsbots and PUL wraps which you can pick up on Ebay for not much. In fact, if you wanted to buy a complete set of Bamboo tots bots size one, I have a bunch to sell if you PM me. We can agree terms.