Establishing a “Rainy Day” Fund: Best Practices

If the past few years have taught us anything, it’s this: life is unpredictable. And while we all like to celebrate the good, sunshine-filled days, the reality is that rainy days also happen – both literally and figuratively. Whether it’s a broken-down car, unforeseen home repair, or unanticipated out-of-pocket medical expense, these things can happen at any time – and send us reaching into our wallets. Yet, despite this, a 2022 Federal Reserve Board report found that nearly one-third of adults would not be able to completely cover an emergency expense of just $400 with cash1. Yikes!

Fortunately, stockpiling savings for these “stormy” days can help you cover unexpected costs or financial difficulties. You may have heard this concept referred to as a “rainy day” fund. So, what exactly is this fund? Simply stated, a “rainy day” fund is a pool of savings set aside for occasional expenses that are bound to happen over time. These can be for the things that you don’t necessarily account for in your monthly budget but are likely to occur eventually.

But with today’s inflation rates and living off a reduced or fixed retirement income, setting these funds aside may sound easier said than done. Fortunately, it doesn’t take much to start building your fund. Consider these best practices to get started.

Determine Your Budget
Before you can set aside cash for your “rainy day” fund, you’ll first need to make sure you have enough money to cover your monthly bills and expenses. That’s why the best place to start is by determining your budget to identify just how much you have available to save. Start by totaling up your fixed expenses every month. These could include any mortgage or rent payment you may have, a car payment, a phone bill, and any other utility expenses. Next, assess your variable expenses to see how much you’re actually spending every month. These expenses could include groceries, dining out, or entertainment activities. Add up your fixed and variable expense totals, and then subtract the sum from your total monthly income. The result will be your “available income,” or cash left to use at your discretion. This pool of funds is a great place to draw from in order to gradually build your “rainy day” fund.

Automate Your Savings
Another way to grow your “rainy day” fund is by using a set-it and forget-it approach—and automated tools. For example, using online banking, you can set up an automatic recurring transfer of cash from your savings or checking account into your fund. Even if it’s just $50 or $100 per month, this steady stream of cash flow can grow over time – without you ever even having to give it a second thought. Similarly, you can set up a separate direct deposit so that a portion of your income goes straight to your “rainy day” fund. All it takes to get started is a one-time set-up – and from there, you’ll get to watch your fund grow!

Identify Opportunities To Save
Perhaps the best way to free up more cash for your “rainy day” fund is by finding opportunities to save elsewhere. Once you’ve determined your budget, you’ll be able to identify areas to cut back. Whether it be going out to eat slightly less often, cancelling a streaming subscription or two, or clipping coupons before heading to the store – these small changes can add up over time. There are also plenty of senior discounts available across restaurants, entertainment, travel, and more – often times, all you have to do is ask for them! And saving money doesn’t necessarily have to mean cutting back – you can also take advantage of opportunities to save throughout the year. For example, if you receive a check or cash gift for a holiday or birthday, consider setting aside a portion of that money to pad your “rainy day” fund. You can also do the same with your tax refund check!

Find Ways to Generate Additional Income
Just because you’re in or nearing retirement does not mean that your income has to drop drastically. According to a poll, 74% of Americans plan to work beyond retirement age – with a majority of them planning to do so because they “want to” rather than “have to”2. If time and circumstances allow, you may find yourself wanting to boost your retirement income by taking up a side hustle or part time gig. The key is finding something you enjoy doing. If you’re crafty, you may consider selling some of your creations via an online storefront. Like to golf? Consider picking up a part time gig at a pro shop or giving lessons to others looking to perfect their swing. The possibilities here are endless – and any extra money you make can be put towards your “rainy day” fund to ensure you are prepared for future expenses.

Tap Into Your Home Equity
For many retirees, their largest asset and source of wealth is their home. And if you’re age 62 or older, you can tap into some of your housing wealth with a reverse mortgage – all while still living in your home well into retirement years. There are several methods for receiving funds with a reverse mortgage and how you choose to use this money depends on your retirement goals and personal financial situation. Some common use cases we see include keeping more money on hand to pay for everyday bills and expenses, setting aside funds to help pay for expenses in the future, or establishing a line of credit to better prepare for emergencies or occasional expenses – just like a “rainy day” fund.

Want to learn more about how home equity can help you establish a “rainy day” fund for future needs? We can help. At Longbridge Financial, reverse mortgages are all that we do. And we’re committed to recommending the program only after we’ve made certain that it is right for you and meets your unique needs. We’ll get to know you, your goals, your home, and your finances as we discuss your options.

For more information or to see why 1.2 million Americans have already make a reverse mortgage part of their retirement plan3, contact the Longbridge team today.

1 The Fed – Dealing with Unexpected Expenses (
2 Most U.S. Employed Adults Plan to Work Past Retirement Age (
3 Annual HECM Production Numbers – NRMLA (

Receive a Free Information Kit

Please enter a number from 62 to 130.
To qualify, must be 62 or older
Please enter a number greater than or equal to 1.
Proceeds based on appraised home value.
Please enter a number greater than or equal to 0.
(if applicable)

Co-op properties, rental homes, and rental apartments do not typically qualify. Contact a Longbridge specialist for more information.

By submitting your phone number you are providing your signature and express “written” consent to having Longbridge Financial LLC or our mortgage partners contact you about your inquiry at the phone number you have provided. You agree to be contacted via a live or automated prerecorded telephone call, text message, or email even if you have previously registered on a “do not call” government registry or requested Longbridge to not send marketing information to you. You understand that your telephone company may impose charges on you for these contacts, and you are not required to enter into this agreement as a condition of any Longbridge products or services. You understand that you can revoke this consent at any time by calling Longbridge Financial at 855-523-4326.

For information on how we collect and use personal information, please see our Privacy Notice.