If your business doesn’t have a rainy day fund, you are going to be in a tricky position if you are hit with an unexpected cost. If you need to carry out maintenance around the office or you have a big tax bill to cover, your rainy day is there to help. It can also help you to survive during a slow period, so you don’t have to shut the business down. Unfortunately, a lot of business owners don’t have a rainy day fund in place because they’re putting everything back into the business without setting anything aside. If you don’t have a rainy day fund for your business, here are some tips to help you build one.
How Much Should You Save?
As a general rule, you should keep around 3 month’s worth of business expenses in your rainy day fund at all times. This will help you to stay afloat during a slow period so you can start working on ways to increase revenue and get the business going again. If you only have a month’s worth of business expenses set aside, that doesn’t give you much breathing room when the business hits tough times.
Managing Your Budget
All businesses should operate with a strict budget and if you don’t, you won’t be able to save any money. It’s important that you know exactly what your outgoings are and how much you are bringing in each month. Once you are at the point where you are breaking even and starting to earn a small profit, you can begin building a savings account. If you find that you can’t afford to save anything, you need to find ways to cut costs wherever you can. It’s also important that you have enough money to invest in business development as well as savings, so make sure that you balance your budget well.
Make Some Investments
If you want to boost your rainy day fund, you should consider making some investments with your savings. If you are a beginner, Forex trading or CFD trading are both great options. Check out this Forex vs CFD comparison to work out which is best for you. If you can make some sensible investments, you can boost your rainy day fund and protect yourself from financial issues. However, it is important that you manage the risks carefully and don’t put all of your money into investments because you could lose it all.
Set Up Automatic Savings
Saving is so much easier if you don’t have to think about it. If you start spending money and then putting whatever is left into savings, you won’t end up with much in your rainy day fund. It’s far better to set up automatic savings and move the money over before you spend on anything else. This encourages you to find ways to cut back elsewhere so you can always make sure that you are contributing to your savings.
Follow these simple steps and you can build a rainy day fund to protect your business from any unexpected costs.