It’s not a typo. I didn’t mean SPF (even though sunscreen can be a good idea). SDFs (Sunny Day Funds) are my positive spin on Rainy Day Funds. While it is common sense to have money on hand for both expected and unexpected expenses, many struggle with either not having reserves or feeling scared to use their reserves.
Personally, we recently experienced two unexpected expenses related to homeownership. Thankfully, the SDF’s were in place and the costs of these events didn’t require going into debt and didn’t add financial stress to the already stressful situations.
In Chapter 5 of my book, Going Rogue! Unconventional Financial Strategies for Women, I teach about the concept of saving money for specific reasons like future purchases or expenses. Think of SDFs (Sunny Day Funds) as electronic envelopes. This concept can be easy to embrace for fun expenditures like vacation. When it comes to home or auto repairs it may not seem like an exciting reason for saving, but when those expenses arise you’ll be glad you had the money on hand.
You may be wondering, “How much should I save in my SDFs?”. If you own a home, my suggestion is that you save 1-2% of the value of your home annually. EVEN if your home is relatively new. Why? Things happen! Appliances fail. Mother Nature can do some damage. Trends come and go. Maintenance-free doesn’t necessarily mean you’ll never have to update, repair or replace things around your abode.
If your home is valued at $900,000 and you decided to save 1% per year you’d want to save $9,000/year or $750/month. You can save based on the frequency of your paycheck if that seems more manageable. If you get paid weekly, save $173. Or bi-weekly $346. The idea is to think of it as a bill and save regularly so the money is there for you down the road.
In addition to having money on hand, SDFs can help keep you on-budget and debt free. The idea is that you give yourself permission to spend what’s available in that designated account.
I hope you are saving for fun things like weddings, vacations, new cars, and graduations…and that you pay for them with cash.
The unexpected is to be expected. I don’t wish the unexpected on you. My intention with this post is to help you be prepared!
These days most banks and credit unions allow you to have an unlimited number of accounts. Look for High Yield Savings accounts to maximize your interest rate and check to make sure you won’t be hit with low transaction fees or for falling below the minimum balance. Next, set up systematic transfers into your SDF(s) to prepare for those expected and unexpected costs.
If this sounds good, and you aren’t sure where to start or how to make it all work, like when to save and when to invest, there’s good news! My team and I are here to help. From personalized Life$tyle Analysis to strategic planning for your Life$tyle Goals, all you need to do is ASK.
Schedule your initial, no-cost, no-obligation conversation with us today using this link.
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Contact our office: (231) 733-1166
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Read and apply what you learn in Chapter 5 of Going Rogue! Get your copy here.
