How to build your rainy day fund to protect your savings

A rainy day fund keeps financial anxiety at bay when unexpected life events occur.

According to the 2024 Financial Inclusion Survey from the FISC and the BSP, the number of Filipino adults with resilience-building tools like savings, insurance policies, and investments drastically declined from 2019 to present. 53% of Filipinos had ample savings in 2019, which dropped to 37% today. Insurance policy ownership declined from 23% to 17%, and reliable investment from 15% to 10%.

The number of who lack the means to fund their needs in the event of emergencies like illness are increasing, even without a global pandemic.

Fortunately, in the same way that you can prepare for rainy days, you can also anticipate and plan for possible expenses. And if you are financially prepared, you will have enough resources to cover your family's expenses; thereby, avoiding borrowing money, taking out loans, or falling into debt.

That is why having a rainy day fund, also called an emergency fund, can provide peace of mind. It protects your savings from being drained by situations such as job loss, illness, hospitalization, or even disasters such as flooding. When reality comes pouring down, do you have a financial umbrella on hand? Here are some ideas to get you started on building your rainy day fund:

• Evaluate your financial situation. Start by assessing your present financial status. This will allow you to identify your resources, check on expenses you can forego, and plan how much money to set aside for your rainy day fund. Think about personal needs, financial goals, debt, and cash flow, among others.

• Set a target amount. Conventional financial advice may say a rainy day fund should be anywhere from three to six months’ worth of expenses. However, as the pandemic has shown us, giving yourself a longer lifeline can make a difference, especially during emergencies.

• Create a budget. This will guide your spending and help you avoid excessive purchases which can affect the money you will allot for your emergency fund. Set aside a portion of your monthly income and strictly observe this until you reach your goal.

• Save extra money that may come your way. One of the quickest ways to budget for a rainy day fund is to save your 13th month bonus, pay raises, part-time work income.

• Keep your emergency fund in a separate savings account. This way, the money set aside will not be in danger of being used for day-to-day expenses.

• Make saving for the rainy days a habit. If an emergency occurs and leads you to spend your rainy day fund, make sure to replenish it. Even if you have already met your target amount, it is critical that you continue to set money aside on a regular basis.

• Get an insurance plan. Insurance is the foundation of your plan for a secure financial future. It helps protect your finances when you're faced with emergencies. 

At Sun Life, we offer Sun Life Save and Protect - a reliable protection and savings plan designed for goal-driven employees or professionals. This plan helps safeguard your loved ones’ future and supports your journey toward achieving your life goals. Here are some reasons why it can further help you to build your savings: 

• Maximum insurance protection - Get up to 20x maximum protection coverage for your family’s peace of mind*.
• Guaranteed money back - Establish financial security as you reach significant milestones in your life.
• Living benefits - In case of emergency, you may access your guaranteed cash value via a policy loan.

It is critical to begin saving for a rainy day fund as soon as possible. As your Partner for Life, we are here to guide you and be financially prepared for the future. Talk to a Sun Life advisor today!

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