You would have probably heard of the saying, “When it rains, it pours,” – particularly when it comes to financial problems because there is a compounding effect. Therefore, it is advisable to create a “rainy day fund” before a financial tsunami hits you.

What is a rainy day fund?
A rainy day fund is typically a fund that you have created to pay for unforeseen expenses. For example:

* Your car needs a new set of tyres.
* Your home is infested with termites and requires treatment.
* Your child has appendicitis and needs to undergo surgery.
* You need to remove your wisdom tooth.
* Your company suddenly winds-up.

The list can go on and on and you may not necessarily experience only one of the above but all together. That’s when the tsunami strikes.

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Many advisors recommend a "rainy day fund" of up to eight months just in case.

Save it for a rainy day-That is a good way to avoid panic.But one must always have a clear and single focus ina ll matters regarding money and possessions.

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