The meaning of a “rainy day fund” is savings that help you get through bad weather, financially speaking. The bad weather could mean a medical expense that your insurance doesn’t cover, a car repair, or any number of other “uh-oh” moments.
Many people aren’t prepared to cover this kind of surprise expenditure, even if it’s just $100 or so. Perhaps they are living paycheck to paycheck; are focused on paying down debt; or are saving for a big goal such as a down payment on a house. Having funds set aside can keep little financial storms from wreaking havoc with your monthly budget and longer-term money aspirations.
With that in mind, here’s what you ought to know about rainy day funds, including how to start one and a good amount to save.
Key Points
• A rainy day fund serves as a savings buffer for minor unplanned expenses, typically ranging from $500 to $2,500.
• An emergency fund, in contrast, should cover major financial disruptions and hold three to six months’ worth of expenses.
• To determine the ideal rainy day fund amount, consider potential one-off expenses and adjust savings goals accordingly.
• Effective strategies for building a rainy day fund include cutting nonessential spending, earning extra income, using windfalls, saving change, and setting up automated transfers.
• High-yield savings or money market accounts can be ideal for storing a rainy day fund, offering accessibility and interest growth.
Examples of a Rainy Day Fund
A rainy day fund is a preset amount of savings set aside to cover extra, one-off expenses that may crop up throughout the year like a car or home repair.
They are called rainy day funds because, just as you need to have a backup plan to accommodate bad weather, you’ll also want to have a backup to accommodate sudden extra expenses.
Just like a thunderstorm, a broken dishwasher can occur out of the blue. Being prepared for little financial upsets can keep them from becoming major stressors and disrupting your financial life and/or causing you to go into debt to cover the costs.
💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.
Rainy Day Funds Vs. Emergency Funds
You may wonder how rainy day money differs from an emergency fund. Typically, it’s an order of magnitude.
• A rainy day fund is generally a significantly smaller amount of savings meant to cover expenses that have a good possibility of coming up, you’re just not sure when. These could also be expenses that always come up once or twice a year, such as annual maintenance of your home heating and air conditioning systems.
You may also sometimes hear the term “cash cushion” when people refer to smaller savings vs. an emergency fund.
• An emergency fund is a larger back-up fund typically containing three- to six months’ worth of living expenses. An emergency fund is designed to be used for more extreme financial disruptions, such as a job loss, major medical bill, or the need for a new roof.
Here’s how this information looks as a table:
| Rainy Day Fund | Emergency Fund |
|---|---|
| A small amount of cash to cover predictable, one-off expenses | A fund of three to six months’ worth of living expenses |
| Used to cover such expenses as home repairs and maintenance or a minor car repair or a special occasion (such as hosting a baby shower) | Used to cover major expenditures such as a large medical, dental, or car repair bill, or to pay bills in the event of job loss |
Why Can’t I Use My Emergency Fund?
Technically, an emergency fund’s uses could include covering smaller, short-term expenses.
However, if you’re wondering when to use your emergency fund, depleting it on lesser expenses can chip away at your ability to cover the larger, truly unexpected expenses that could occur down the line. After all, having an emergency fund waiting when you need it is a cornerstone of good money management.
In that scenario, you might need to resort to using credit cards, a personal loan, or even a payday loan. Due to the high-interest rates on some of these types of loans, you would end up paying much more in the long run.
Or, you might have to withdraw from whatever kind of retirement fund you have or from your child’ s college savings, which could hurt your long-term financial health. Having a rainy day fund available can help you avoid that situation.
Recommended: Emergency Fund Calculator: How Much Should I Save?
Do You Need a Rainy Day Fund?
Many people could benefit from having a rainy day fund. It’s a sum of money (often between $500 and $2,500) that’s available for expenses that pop up in a typical year and could otherwise throw a wrench in your budget.
If you have a very well-stocked emergency fund that you don’t mind dipping into, you may not feel as if you need an emergency fund. However, financial experts often advise that you not tap your emergency fund except for true emergencies.
Slowly but steadily, building a small rainy day fund (whether kept at an online bank or a traditional one) can give many people more financial security.
Get up to $300 with eligible direct deposit when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 3.80% APY on savings balances.
Up to 2-day-early paycheck.
Up to $3M of additional FDIC insurance.
How Much Money Should I Put in My Rainy Day Fund?
As mentioned, a ballpark figure for a rainy day fund could be to have between $500 and $2,500 saved. That can be a reasonable amount to help cover unexpected costs.
How much you’ll want to set aside in your fund, however, is highly individual and will depend on your financial situation and potential upcoming expenses.
One way to figure out a target amount for your rainy day money is to create a list of some possible rainy day expenses that could come up.
For example, if your health care deductible is $1,500, you might want to keep at least that much in your rainy day fund. Car repair prices range, but common fixes on the brakes or alternator cost between several hundred dollars to a thousand (or more). Just in case two rainy days happen close together, it’s a good idea to increase your savings goal.
If you’d like guidance for your unique situation, consider paying the cost of a financial advisor for a bit of advice. They can look at your current finances and help you create an excellent savings plan. They can also help decide how much money to put in a rainy day or emergency fund.
Another way to figure out a target amount for your rainy day fund is to create a list of anticipated larger expenses. These are purchases, costs, and bills that arise only a few times a year, but aren’t always tied to an exact date. They can include:
• Home gutter cleanings
• Car maintenance
• Back-to-school shopping
• Annual subscriptions
• Emergency Childcare
• Emergency room visits
• Parking tickets
• Tax bills
• Birthday and holiday gifts
• Plane tickets
• Appliance replacement
You may want to review this list, as well as look at large one-off expenses that came up last year, to come up with a ballpark figure for your rainy day fund.
How Do I Save for a Rainy Day Fund
The process of building up your rainy day fund is similar to saving money for any goal or major purchase. There are several different strategies to choose from, and you may want to combine a few.
• Cutting back on nonessential spending. You may want to take a look at your monthly outlay of money over the past few months. See if there are any simple places you can cut back, such as cooking a few more meals at home each week, getting rid of a streaming service you rarely watch or spending less on clothing each month. The funds you free up can get funneled into your rainy day savings account.
• Bringing in some extra income. Picking up a side hustle (like dog walking, babysitting, or food delivery), selling things you no longer use online, or doing some freelance work can help you build your rainy day savings fund.
• Take advantage of windfalls. A money windfall, or a sudden influx of cash, such as a bonus, cash gift, or tax refund, can be a quick way to build your rainy day fund.
• Keeping the change. Putting all your leftover change in a jar and watching it add up is an old-fashioned but still effective way to save. When the jar is full you can deposit the money in the bank to give your rainy-day fund a bump. Or use a rounding-up tech function (available at many banks) to add to a savings account.
• Setting up automated transfers. Establishing an automatic transfer from your checking into your rainy day savings account on a set day each month (perhaps after your paycheck gets deposited) can be one of the most effective ways to grow this fund. Even if the amount is small, it will add up quickly because the automatic savings will happen every month no matter what.
Recommended: Benefits of Automating Your Finances
Where Should I Keep My Rainy Day Fund?
You’ll want to keep your rainy day fund in an account that is separate from your spending (so you don’t accidentally spend it) but is still easily accessible.
Good options include a high-yield savings account, which are typically available at online banks, often with no or low fees and without deposit or minimum balance requirements.
Other options include a money market account, which typically offers higher interest than a standard savings account but allows you to access your money when you need it. That kind of liquidity is valuable, since you never know when a minor emergency will crop up.
The Takeaway
Setting up a separate rainy day savings account can help you manage those annoying but essential extra expenses that can crop up throughout the year that might otherwise throw you off balance.
As you use your rainy day fund to cover pop-up expenses, it’s a good idea to fill it back up, so you’ll have financial back-up the next time you need it. What’s more, keeping your rainy day fund in an interest-bearing account can help it grow as it sits there, providing you with a sense of security.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What is considered a rainy day fund?
A rainy day fund is a sum of cash, often between $500 and $2,500, held in an easily accessible account (preferably interest-bearing). The money is to be used for those expenses that crop up during the year, such as purchasing a new dishwasher or paying for holiday gifts.
Is a rainy day fund different from an emergency fund?
A rainy day fund is typically smaller than an emergency fund and designed for smaller-scale expenses, such as home maintenance issues. An emergency fund is usually a sum of three to six months’ worth of living expenses, and it can be used for major medical bills, say, or to pay bills after job loss.
Should I prioritize a rainy day fund over paying off debt?
Both paying off debt and a rainy day fund are important priorities for financial wellness. Some, however, might say that paying off high-interest debt is more urgent than accruing a rainy day fund.
How do I replenish my rainy day fund after using it?
A good way to replenish your rainy day fund after using it can be to set up automatic transfers into your checking account over time or to use a windfall, such as a job bonus or tax refund, to add to it.
Is a rainy day fund different from a sinking fund?
A rainy day fund is typically money that is set aside for fairly predictable (but often overlooked) expenses, such as vet bills or a new water heater. A sinking fund, on the other hand, describes money saved for a specific, planned purpose, such as a home renovation.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.
Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
SOBNK-Q125-076