Member Article

Be prepared for the rainy day

Louise Oliver explains the importance of rainy day thinking

LIKE me, you’re probably not old enough to remember that old Depression era song that said: “Every time it rains, it rains pennies from heaven.”

The theme was quite simply one of counting our blessings and reminding ourselves that things are never as black as they seem.

We’ve been through a few Depressions since then – in fact, we’re only just emerging from the latest right now.

And now, just as back in the 1930s, there’s a lot to be said for preparing for that rainy day.

Many of us strive to put a little money aside. Whether it’s a rainy day fund, some cash to help towards the cost of a special celebration or the annual summer holiday.

Despite the current low interest rate environment, saving money on a regular basis will always be a habit worth adopting.

Even a balance of a few hundred pounds will help if you are suddenly faced with an unexpected bill and will save you having to rely on expensive plastic.

However, for most people the hardest part of saving is actually getting started.

We may have good intentions of saving some of our salary at the end of the month, but by the time we get there it’s often been spent elsewhere.

A sensible solution is to set up a standing order so that your money is switched to your savings account the day after you get paid, that way it won’t be sitting around in your current account tempting you to spend it.

Many banks and building societies offer regular savings accounts with initial interest rate incentives for a regular commitment each month.

It varies on individual situations as to how much we should save for a rainy day.

There are always expenditure items which come out of the blue and surprise us, whether it is the boiler on the blink, a family member needing financial help or the onset of an illness which may mean that work is not possible.

Having a good understanding of your employee benefits package is paramount.

This can clarity the ‘what if’ areas , questions such as how long are you paid for if you are ill for a long period of time, or discovering if there any life assurance/critical illness or health insurance benefits provided.

This will help you to establish how much the emergency fund should ideally be.

It is a fact that most of us do not have the benefit of a good employee benefits package with all of the frills so saving for that bolt out of the blue is sensible.

Cash Individual Savings Accounts (ISAs) can be useful for rainy day monies. They are tax free and usually accessible provided that you don’t go for an account which is tied up.

There are also N S & I accounts which are worth considering such as Premium Bonds which are accessible easily.

It is difficult to save, especially with the demands on income each month but once you see your savings begin to build it is quite empowering and leaves you with the feeling of a degree of financial security.

Over the years I have visited schools to attempt to educate children to budget and save as this is something that they are not ordinarily taught on the curriculum.

It is important that we try and instill this in the next generation as we are potentially breeding a generation of spenders having been brought up in an era of pretty much getting what they want!

They have to realize that money does not come easily and that it is best to plan for the future and those rainy days…rather than waiting for those pennies from heaven!

For more information contact louise.oliver@piercefield.co.uk tel: 0845 2578749 www.piercefieldoliver.com

Piercefield Oliver is a trading name of Piercefield Asset Management Ltd, which is authorised and regulated by the Financial Conduct Authority.

This article is not intended to provide specific advice to individuals and is generic in nature.

This was posted in Bdaily's Members' News section by John Highfield .