What is emergency savings?

Emergency savings (or rainy day fund) is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies.

Why do I need it?

Without savings, a financial shock—even minor—could set you back, and if it turns into debt, it can potentially have a lasting impact. Some common financial shocks include car repairs, home repairs, medical bills, or a loss of income.

People who struggle to recover from a financial shock may rely on credit cards or loans, which makes the problem even worse. They may also pull from other savings, like retirement funds, to cover these costs.

How much do I need in it?

Experts typically recommend saving 3 to 6 months of essential living expenses, but the amount you need to have in an emergency savings fund depends on your situation. Think about the most common kind of unexpected expenses you’ve had in the past and how much they cost. This may help you set a goal for how much you want to have set aside.

If you’re living paycheck to paycheck or don’t get paid the same amount each week or month, putting any money aside can feel difficult. But, even a small amount can provide some financial security.

How does Rainy help with emergeny savings?

Rainy helps low income workers build emergency savings quickly by matching their monthly savings. Our match not only accelerates savings, but motivates people to save by making it easier to save. We also give hands-on financial skills and stock market experience that serve participants the rest of their lives.