Advertiser Disclosure

Banking

How Important Is It to Have a Rainy Day Fund?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

rainy day fund
Be prepared for the unexpected with a rainy day fund.

Life is unpredictable, which is why a rainy day fund is one of the most important components of a sound financial foundation. Even the most prepared, organized people can be caught off guard and put into a difficult financial situation when the unexpected arises. Because of this, it’s essential to have money tucked away in an emergency fund and a rainy day fund. While most people would agree that having easy-to-access cash is important, 29% of households have less than $1,000 in savings, according to a recent MagnifyMoney study.

In this post, we’ll explain exactly what a rainy day fund is, how much you should save and how to start one today.

What is a rainy day fund?

Rainy day fundEmergency fund
Money set aside for predictable expenses, like a roof repair or trip to the mechanic. Money set aside for unpredictable, and unplanned for expenses such as job loss, divorce or a sudden change in income.

Often, the terms rainy day fund and emergency fund are used interchangeably. While they are both savings accounts that can be used to pay for the unexpected, they differ in a few key areas. It’s important to learn the difference between the two types of savings accounts and contribute to both.

A rainy day fund is a designated amount of money that has been set aside for one-off expenses that you can typically predict the need to pay for at some point. Rainy day funds should be easily accessible and used to cover expenses that fall outside of your normal budget. This fund can be used to pay for things like car or house repairs, broken appliances, additional taxes, children’s field-trip fees, or last-minute travel expenses. While these expenses are usually not part of your monthly budget, you could likely anticipate the need to pay for them once or twice a year. So, a rainy day fund comes in handy.

“The number one reason to have a rainy day fund is peace of mind,” said Corbin T. Green a financial advisor in Salt Lake City. “People are able to go to bed knowing that if something were to happen, there are funds available to take care of that.”

This fund allows you to pay for smaller, one-off expenses without going into debt or pulling from your checking account and throwing off your well-planned budget that is used to pay for predictable monthly bills and expenses.

An emergency fund is exactly what it sounds like—a reserve of money or savings account that you can quickly access in case of an unexpected and unplanned life emergency. Typically, emergency funds are used to pay for unexpected, longer-term events such as medical bills, job loss or divorce.

“If something were to happen where you got laid off, left a job or got injured, having an emergency fund protects you and buys some time,” Green said.

Experts suggest having three to six months’ worth of money in this account that you could easily access and use to run your household and pay your monthly bills in the case of an emergency.

How to save for your rainy day fund

rainy day fund side gig
Consider taking on a side gig to bring in extra cash for your rainy day fund.

It can seem daunting to put extra money away each month, but saving money is a key part of smart financial planning. We know it’s important to save for your rainy day fund, but how do you get started? Here are some easy ways to save more money each month:

  • Create multiple savings accounts: Instead of lumping all your money into one savings account, create multiple savings accounts to help you distinguish between the emergency fund and the rainy day fund. If you ever need to access either of these accounts, you’ll know which one to pull from.
  • Automate your savings: It’s easy to say you’ll put extra money into your savings account at the end of each month once bills are paid. But, if you don’t pay yourself first, at the end of the month, you likely won’t have saved what you originally intended. By automating your savings, you’ll automatically have money set aside each month and won’t have to worry about it. Treat your savings as a bill and pay it automatically, on time, each month.
  • Reduce your spending: Money saved is money earned. If you’re looking to save for a rainy day fund, try trimming your spending and adding a little more each week or month to your fund. Cut back on eating out or your daily coffee run and put that money towards your fund.
  • Take on a side hustle: Many millennials are taking on additional work or side hustles as a way to earn more money. If your full-time salary isn’t cutting it, consider taking on a side hustle as a way to quickly boost up your rainy day fund.

Where to keep your rainy day fund

rainy day fund
The best place to stash your rainy day fund is in a savings account, where you can easily access the money in a time of need.

Now that you’ve built up some money for your rainy day fund, where should you keep that money? You want to find a safe place to store your money that gives you easy access to the funds in a pinch but can also allow you to earn interest on your funds.

The best options

Saving accounts: A savings account is a no-brainer when you’re looking for a place to stash your rainy day fund. Savings accounts are FDIC insured and offer better interest rates than checking accounts. Check out the best savings accounts here.

Money markets:Money markets are a type of account that usually offer higher interest rates than checking or savings accounts. You can access more money relatively easy, but money market accounts may limit the number of withdrawals each month. Also, most money market accounts require a minimum balance to be met.

Avoid these options

Checking accounts. Checking accounts probably aren’t the best option for your rainy day fund. They give you quick, easy access to your money, but often offer low, if any, interest. You may also be more tempted to spend the cash if it’s readily accessible in your checking account and you’ve got a linked debit card you can use.

CDs.CDs often charge early withdrawal penalties when you try to cash them out before your term is up. Since emergencies are unpredictable, avoid locking your rainy day fund up in a CD. Stick to accounts that offer easy access like a savings account.

What to spend your rainy day fund on

rainy day fund
A home repair or unexpected medical bill are two examples of a good time to dip into your rainy day fund.

Rainy day funds are usually not used to cover ongoing, long-term, emergency events. “If it’s a true emergency, it’s usually not a materialistic expense,” said Green.

Rainy day funds can be spent on things like car repairs, new tires, and emissions and inspections. Or perhaps you need a new washing machine, fridge, roof or floor? Rainy day funds are meant for such expenses. Most people wouldn’t budget for a new roof because it’s a one-off expense. However, it’s somewhat predictable that you’ll have to repair your car or home at some point, so this type of fund is the perfect financial resource for occasions like this.

However, if you lose your job, become sick or are unable to work for a sustained period of time, you would not use your rainy day fund, but instead, pull from your emergency fund.

“Use your emergency fund when something impacts your ability to earn a paycheck or you lose your income and need to use it [emergency fund] to pay your bills and live off of it,” Green said.

Why a rainy day fund is important

rainy day fund

Change is the only predictable thing in life. It’s almost inevitable that something unplanned will occur requiring additional money to pay for it. Knowing this, it’s smart to plan ahead and prepare for the unexpected. Having a rainy day fund is important because it gives you peace of mind and financial protection in case something happens. This type of fund is extra padding in your budget that can keep you out of debt and on track financially, no matter what unexpected life event unfolds.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sage Evans
Sage Evans |

Sage Evans is a writer at MagnifyMoney. You can email Sage here

Advertiser Disclosure

Banking

U.S. Bank vs. Chase: Which is Better?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Choosing the right bank for you means balancing different wants and needs. Folks who are intent on earning the highest interest rates possible might want to look toward online banks or credit unions, which tend to offer higher rates. On the other hand, big national banks like U.S. Bank and Chase offer more extensive services and a face-to-face banking experience.

When it comes to U.S. Bank vs. Chase, there’s no one right answer. However, by examining the most important factors — reputation, location, rates, account options and fees — we can help you decide whether U.S. Bank or Chase Bank will help you make the most of your money.

U.S. Bank vs. Chase: A brief overview

U.S. Bank and Chase are both large national banks with longstanding reputations; according to the Federal Reserve, Chase is the largest bank in the country, and U.S. Bank is the fifth largest.

In terms of accessibility, Chase has nearly twice as many branch locations as U.S. Bank and almost four times as many ATM locations. Both banks have middle-of-the-line customer reviews: U.S. Bank is ranked two-and-a-half stars out of five on DepositAccounts, another LendingTree subsidiary, while Chase has three stars out of five.

Finally, when it comes to comparing U.S. Bank vs. Chase rates and fees, the two banks are similar, though U.S. Bank tends to charge slightly lower fees.

U.S. Bank vs. Chase: How they compare on rates

Neither U.S. Bank nor Chase presents a clear advantage when it comes to rates. They have the same rates on their basic savings account, and their CD rates fluctuate, with the better deal depending on which CD product you’re after.

When compared to rates offered by online banks, both U.S. Bank and Chase fall far behind in this category.

 U.S. BankChaseNational Average***
Checking*NoneNone0.198% APY
Savings**0.01% APY0.01% APY0.281% APY
1-year CD0.10% APY0.02% APY on balances of $0.01 to $99,999.99

0.05% APY on balances of $100,000 or higher
1.324% APY
5-year CD0.75% APY1.40% APY on balances of $0.01 to $9,999.99

1.50% APY on balances of $10,000 to $99,999.99

1.55% APY on balances of $100,000 or higher
2.078% APY
*U.S. Bank Easy Checking Account and Chase Total Checking Account
**U.S. Bank Standard Savings Account and Chase Savings Account
***National bank averages are accurate as of the publish date of this article

U.S. Bank vs. Chase: What account options are available?

You’ll find most of the same account options at both U.S. Bank and Chase. Both banks offer non-interest bearing checking accounts and basic savings accounts, as well as a range of other checking and savings options, including premium accounts that earn higher rates and student accounts. U.S. Bank offers five different checking account options to choose from, while Chase has three choices.

You’ll also find a range of CD options at both banks, starting at 1-month CDs and including several CD specials with higher rates. However, U.S. Bank only offers up to 60-month CDs while Chase offers up to 120-month CDs. As of the date of publishing, Chase does have a $1,000 minimum opening deposit requirement on CDs, whereas U.S. Bank only requires $500.

The one major difference in product offerings is money market accounts, which are an option at U.S. Bank but not at Chase.

 U.S. BankChase

Checking account

Savings account

Certificates of deposit

Money market account

U.S. Bank vs. Chase: How they stack up on fees

The most important factor to consider when choosing a checking or savings account, according to Ken Tumin, founder of LendingTree-owed company DepositAccounts.com, is fees, and how easy it is to avoid them. He advised considering not only your present situation, but the future as well. “Sometimes you can afford a fee waiver with a direct deposit, but what if you lose your job?” he said.

Both U.S. Bank and Chase charge monthly service fees on their standard checking and savings accounts that can be waived. While U.S. Bank’s fees are slightly lower than Chase’s, you might have an easier time getting the monthly fees waived on Chase’s accounts (more on that below).

Another fee that Tumin recommends paying attention to is ATM fees. While both banks charge the same fee for out-of-network ATMs within the U.S., Chase charges more for ATM usage outside of the U.S. However, Tumin explains that it’s important to consider how big your bank’s ATM network is, because in-network ATMs are free. Chase has a much larger ATM network than U.S. Bank.

 U.S. BankChase
Standard checking account$6.95 monthly fee, waivable$12 monthly fee, waivable
Standard savings account$4 monthly fee, waivable$5 monthly fee, waivable
ATM fee$0 at U.S. Bank ATMs, $2.50 at non-U.S. Bank ATMs$0 at Chase Bank ATMs

$2.50 for inquiries, transfers, and withdrawals at non-Chase Bank ATMs within the U.S.

$5 for withdrawals and $2.50 for transfers and inquiries outside of the U.S.
Overdraft fee*$36 for each item of $5.01 or more

$0 for items of $5.00 or less
$34 for each item, not charged if item is $5 or less or if your balance at the end of the business day is overdrawn by $5 or less
*Rates apply to U.S. Bank Easy Checking and Chase Total Checking

Requirements for waiving basic checking account fees at both banks

To get the basic checking account fees waived at either bank, you must have either a certain amount of money direct deposited into your account each month or maintain a minimum balance. U.S. Bank also waives checking account monthly fees if you’re 65 years of age or older. The table below explains the exact requirements.

U.S. Bank checking account fee waiverChase checking account fee waiver
  • Receive monthly direct deposits totaling at least $1,000, OR

  • Keep an average daily balance of at least $1,500, OR

  • Be at least 65 years of age


  • Receive monthly direct deposits totaling at least $500, OR

  • Keep an average daily balance of at least $1,500, OR

  • Keep an average daily balance of at least $5,000 across your checking and other linked Chase accounts, such as deposit or investment accounts


Requirements for waiving basic savings account fees at both banks

It’s also possible to have the monthly service fees on each bank’s basic savings account waived by maintaining a minimum balance. Account holders under age 18 have their monthly fees waived automatically at both banks. Each bank also offers a third option for getting your fee waived.

U.S. Bank savings account fee waiverChase savings account fee waiver
  • Keep a $300 minimum daily balance, OR

  • Keep a $1,000 minimum monthly balance, OR

  • Be under 18 years of age


  • Keep a $300 minimum daily balance, OR

  • Set up at least $25 in monthly autosave or repeating automatic transfers into your savings account from your Chase checking account, OR

  • Have a linked Chase College Checking, Chase Better Banking Checking, Chase Premier Checking, Chase Premier Plus Checking, Chase Sapphire Checking, or Chase Private Client Checking account, OR

  • Be under 18 years of age


When to choose U.S. Bank

  • You’re not sure if you can consistently meet direct deposit or daily balance requirements.
  • You use international ATMs.
  • You’re 65 years of age or older.
  • You want to open a CD with less than $1,000.
  • You want a money market account.

If you’re not sure that you can meet any monthly direct deposit or daily balance requirements consistently — for example, if you have an unstable income or move money around frequently — you’ll probably end up paying monthly maintenance fees at least occasionally, regardless of which bank you choose. In this case, it’s best to go with U.S. Bank, as its monthly fees are slightly lower. This includes ATM fees for international travelers because, while both banks charge the same fee domestically, Chase will charge a higher ATM fee while you’re abroad.

Older customers might also want to go with U.S. Bank because fees are waived if you’re 65 or older.

When to choose Chase

  • You can consistently meet requirements to waive the monthly fee.
  • You want a bigger ATM network.
  • You travel often and need to access branch locations.
  • You already have investment or deposit accounts with Chase.
  • You’re looking for a 120-month CD.

If you think you can consistently meet requirements to waive monthly account fees, Chase would be a better option; its requirements are generally a bit easier to meet on both checking and savings accounts. If you already have deposit or investment accounts with Chase, your balance across all accounts can help you get monthly fees waived as well.

While Chase does charge more for international ATM usage, it also has far more branch locations and free in-network ATMs, so that’s worth considering. Frequent travelers who prefer having access to branch locations might want to consider this as well, as Chase’s footprint is almost twice the size of U.S. Bank’s, and the bank has a larger international presence.

U.S. Bank vs. Chase: Which is better?

Chase’s advantage is its large national and international footprint and, according to customer reviews, its slightly better customer service. However, U.S. Bank is still one of the country’s biggest banks, and it offers slightly lower fees on basic accounts.

Neither U.S. Bank or Chase come out on top in all categories. Assess your personal situation and determine which bank account will result in lower fees and higher rates. As with many financial decisions, the answer depends on your needs.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elizabeth Aldrich
Elizabeth Aldrich |

Elizabeth Aldrich is a writer at MagnifyMoney. You can email Elizabeth here

Advertiser Disclosure

Banking

How to Start Saving Money

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Faced with an unexpected expense, like a car repair or leaky roof, many Americans might not have enough money in the bank to cover the bill. Just over half of U.S. households currently have a savings account, and 29% of households have less than $1,000 saved, according to a MagnifyMoney survey.

Whether putting money away for a rainy day or retirement, good savings habits can prepare you for emergencies and life changes. There are countless ways to build up your savings, from finding ways to cut back on spending to looking for areas where you might be overpaying. The time and discipline you invest implementing them will pay off — quite literally.

How can I start saving money?

If you’re just starting out on the path of building your savings, small changes can add up over time. A review of your budget should uncover items that can deliver larger, immediate gains. Here are more than two dozen money-saving strategies you can adopt for the short-term and the long-term.

Tips for saving money today

1. Set an intention
According to Sergio G. Garcia, associate planner for Quest Capital Management in Dallas, Texas, “saving money is tied to behavior and psychology, so it is important to find a personal focus to drive the savings behavior that works best for you.” Write down the reasons you want to save money, such as buying a house or retiring early, and put it in a place you’ll see every day.

2. Save your spare change
Collect your spare change at the end of the day and put it into a jar — you’ll be surprised at how quickly it can add up. If you use a debit card, some banks, like Bank of America, offer round-up savings plans, automatically moving the change into your savings account. For example, if you spend $19.50, the program will round-up your purchase to $20 and move $0.50 into your savings account.

3. Get a micro-saving app
Similar to saving spare change, you can also link your bank account to a money-saving app that does the savings for you. For example, Acorns automatically rounds up your purchase and moves the change into an investment account.

4. Cut the excess
To save money, you need to know where you’re currently spending it, suggested Matthew Gaffey, senior wealth manager for Corbett Road Investment Management in McLean, Va.: “List and monitor all of your expenses to get a full picture of how much you’re spending and where.” Money management habits will typically shed some light on a few areas that you could reduce or cut, such as unused magazine subscriptions or gym memberships.

5. Adopt a waiting period
The ease of online shopping can be brutal to your budget. Instead of falling for the impulse to make a purchase on the spot, implement a wait policy, such as 24 or 48 hours. You might realize you can live without that item you’re craving.

6. Don’t fall for a “great deal”
It’s hard to resist the lure of a good bargain. But saving 50%, 75% or even 90% isn’t a good deal if you don’t really need it. Instead of focusing on the discount, consider the amount you’re spending and how much you’ll really use the item.

7. Use a cash-back credit card
Some credit cards offer as much as 5% cash back in certain categories, which can add up. For example, the Chase Freedom® card offers bonus categories each quarter that give 5% cash back on up to $1,500 qualified spending, with unlimited 1% cash back on all other purchases. If you spend the full $1,500 each quarter in the bonus categories — which can include gas stations or grocery stores — you could earn $300 cash back a year. If you were going to make these purchases anyway, this is a good way to save money.

8. Find rebates
Before making an online purchase, check cash-back sites like Mr. Rebates or Ibotta and see if the store offers a rebate if you click through the site. You could earn a set cash-back amount or a percentage on a purchase.

Ways to start saving money every month

1. Automate monthly savings
Sign up for automatic savings withdrawals. “Direct deposit from a paycheck is great because then it happens automatically and you don’t even have to think about it,” said Amy Shepard, financial planning analyst at Sensible Money in Phoenix. In addition, she advised, “set reminders to increase your savings periodically, such as every six months or every time you get a raise.”

2. Create specific savings goals
Save for big things, like a vacation or kitchen renovation, by using a bank that allows you to set up separate savings accounts for different goals, said Bethany Griffith, senior financial advisor and partner at Abacus Planning Group in Columbia, S.C. “It can be a great way to jump start savings,” Griffith said. “The visual check-in each time you look at your accounts is a powerful driver for changing behavior.”

3. Do a 52-week money challenge
With the 52-week money challenge, you save more every week, and see clearly how savings can add up over the course of a year. Create a weekly savings challenge by saving $1 on the first week, $2 on the second week and continue until you’re saving $52 on the final week of the challenge. In a year you’ll have saved $1,378, not including interest.

4. Create a weekly meal plan
The average American household spends more than $3,400 a year on meals away from home. You’ll be less likely to eat out or order in if you’ve planned your meals for the week. Having a meal plan also helps you create a grocery list to avoid impulse purchases or food that goes uneaten.

5. Review your monthly bills
It’s irritating when your cable or cell phone bill goes up, but that extra $5 or $10 a month can add up to $60 or $120 over the course of a year. Pay attention to your monthly bills. If you see an increase, call and ask why. If you’ve been a customer for a long time, companies will often lower the rate instead of risk losing you.

6. Pay down debt
Americans pay $113 billion in credit card interest each year. If you’re among those that carry a balance, you can get an immediate return on your money by paying it down and eliminating it.

7. Adjust the thermostat
Save as much as 10% a year on heating and cooling by adjusting your thermostat seven to 10 degrees from its normal setting for eight hours a day. This can be while you’re at work or while you’re sleeping — or both, for even more savings. A programmable thermostat can do the work for you, easily paying for itself.

8. Use a price-drop refund app
Several retailers will give you money back if an item you bought goes on sale, but tracking that can be a chore. Use an app like Earny to do the tracking for you automatically. The app also takes care of the claim — Earny claims it saves the average user $75 each year.

Start saving money over the long term

1. Annualize your spending
A latte or vending machine habit might seem harmless, but when you multiply that daily expenditure by five days a week and 50 weeks a year (assuming you take a two-week vacation), it can add up to a substantial sum — one that might not seem worth it when you annualize your spending. Try this with your regular discretionary spending and see what you could do without.

2. Review your insurance
Make a habit to review your property and auto insurance each year. Jeffrey N. Tomaneng, director of financial planning for Sapers & Wallack in Newton, Mass., recently had an agent audit his policies and made changes to save $2,100 a year in premiums — “within a few days we were off to some much needed household savings,” he said.

3. Sell your stuff
The average American has 42 items in their home they no longer use worth an estimated $723. Sell them! Hold an annual garage sale, or list your items on eBay, Mercari or Facebook Marketplace. Someone else can use and enjoy them and you can pocket the money.

4. Shop around for higher interest rates
Your bank savings account may be conveniently attached to your checking, but if the interest rate is negligible you could be leaving money on the table. Look for higher interest-rate savings accounts that can help you build your balance.

5. Review your withholdings
Each year, review your benefits and withholdings and ensure you’re taking advantage of the benefits your company offers, such as flexible spending accounts or matching retirement. If you get a refund each year after tax season, consider adjusting your exemption amounts and stop giving the government an interest-free loan on your own money.

6. Look for discounts
If you’re a member of a professional or alumni association, you may get discounts on business services, insurance or travel. Make a point to review your benefits each year, and use them to find the best deals.

7. Review your credit card benefits
Before you buy that extended warranty or insurance on your rental car, check and see if the credit card you’re using offers it for free as a benefit of being a cardholder. You can save hundreds of dollars by knowing what you’re already offered.

8. Check your credit report
Each year you should order a copy of your credit report to make sure it’s accurate; you may find a discrepancy that could hurt your chances of getting better interest rates on a loan. You’re entitled to a free report each year from each of the reporting agencies, which you can obtain from AnnualCreditReport.com.

Bottom line

Developing any new habit requires behavior changes — changes that can be uncomfortable at first. But getting into the habit of saving money is worth it. Building a nest egg can provide peace of mind. Once you start seeing your balances grow, the numbers will give you the motivation you need to keep going and keep saving.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Stephanie Vozza
Stephanie Vozza |

Stephanie Vozza is a writer at MagnifyMoney. You can email Stephanie here