While these two types of personal funds sound similar, they are both different and imperative for financially stable families.
An “emergency fund” is meant to be there for you in the event of a financial emergency, such as a job loss or sudden illness. You should have at least 3 months living expenses saved in case of an emergency. While that will take time to build, the most important thing is to have something in your emergency fund, then slowly you can work towards your goal of having enough.
A “rainy day” fund is intended for one time expenses, e.g. your fridge stops working or you need new tires. These funds help you avoid going into debt by helping you afford these small inconveniences that pop up into our everyday lives. It’s important to have a “rainy day” fund to keep your budget in line and help prevent you from going into debt.
Now that you know the difference between an “emergency” and a “rainy day” fund, you can see how they play an important role in anyone’s financial plan. Remember to start with what you think is right for you and as time goes on, you can revise and change the amount you want in it. As long as you are preparing and planning ahead for your future, you should be in good hands.