Your Rainy-Day Fund

When it rains, it pours – and that’s why it’s so important to have a contingency fund for those unexpected expenses and financial emergencies.

The shorts of this article:

  1. What is a rainy-day fund
  2. How to create a rainy-day funds
  3. How to use it when the rainy day comes
  4. Could revolving credit be a rainy day solution?

Read on to learn how…

When you have children, your finances aren’t just your own any more – you have vulnerable little people to care and provide for. It’s true that having a family brings with it many surprises, and some of them are financial. Planning ahead for unexpected situations will help grow your financial capability as a family.


A rainy-day fund is money you put aside exclusively for unplanned expenses. Every family needs one, because emergencies do happen, and having some contingency “cash” can help prevent financial hardship and stress without having to rely on credit cards or personal loans with high-interest rates. In the current cost of living crisis, this becomes even more important because of the increasing risk of price hikes and job losses.


In his book Money Made Simple, Sam Stubbs suggests: “One way to get a rainy-day fund is to set up an account you don’t normally see on your banking website or app, and put in a little each week.” The idea is to trick yourself into forgetting it exists until you really need it.

Here are some steps you can follow to create a rainy-day fund:

  • Determine your regular monthly expenses including rent/mortgage payments, utilities, groceries, transportation, etc.
  • Then try to calculate any future additional expenses which could come up: Fridge repairs if your fridge is old, vet bills if your dog gets injured, fixing a leaky roof if you own your house, unexpected travel costs if you have family living elsewhere.
  • To work out what total sum to aim for, add three months of regular expenses and a couple of surprise expenses. Then calculate how much you can realistically put aside each week to reach this goal, Prioritise this and make it a regular part of your budget
  • Open a separate account for your rainy-day fund to avoid spending it on something else. Make sure it’s a high-yield savings account that’s not difficult to withdraw your funds from.
  • Set up a regular automatic transfer to your rainy-day fund from the account into which you receive your income.


Remember to use the fund only for emergencies, not for luxury items or entertainment. Keep track of how much you withdraw from the fund, so you can replenish it as soon as possible.

If you get into serious hardship and don’t have any other options, you may be able to apply for a Serious Financial Hardship withdrawal from your KiwiSaver account. However, Sam cautions not to rely on that too much: “These withdrawals are highly restricted – you need to meet hardship criteria, submit details of your financial situation to your KiwiSaver scheme’s Supervisor and prove you don’t have access to alternative sources of funds. This is really designed to be a last resort.”


If you have a mortgage, you may be able to set up a revolving credit facility as a portion of your loan – a line of credit that you can draw on when you need it. Unlike other loan types, you can repay some or all of the outstanding balance at any time without penalty, and later redraw up to the limit. Revolving credit allows you to draw on funds in an emergency but works toward paying off your mortgage in the meantime – as opposed to having the rainy day fund in a savings account that earns less interest than your mortgage interest.

More articles by Tots To Teens and  Simplicity to help families tackle the increasing cost of living:

How you can help your kids save

Tackling the hidden costs of living

Understand the power of compounding interest

Old Wisdom For Today’s Modern Money Challenges

Important Financial Milestones for your Family

The Challenges of Home Ownership for Kiwi Families

Scroll to Top