8 Reasons for a Rainy Day Emergency Fund

As the saying goes, “Life happens.”

Even if everything is going well, there are unfortunate situations that may arise. When calamity strikes, you want to be prepared.

One of the best ways to do this is to have an emergency savings fund. It can be the difference between a disaster and just a bump in the road.

Not sure why you need an emergency savings fund? Even if you make enough money to cover your needs each month, it’s essential that you have one set up.

Rainy days can happen, and if you aren’t prepared it can really hurt you financially. Here’s why you need to be ready with an emergency savings fund.

Below, we give you eight reasons to have an emergency savings fund built up and ready in case life deals you an unexpected blow.

1. You Can’t Predict the Future

No matter how well life is going, one rule applies: You cannot predict the future.

You have no idea what’s just around the corner. It may be continued good days where everything is going your way–or it may be the opposite.

Because you don’t know what you’ll be facing tomorrow, next month, or next year, you need to have emergency funds on hand. Being able to cover your expenses in case of job loss, injury, or another stressful situation is important.

Even if you feel secure in the predictability of your life, things can come up that you never saw coming. Don’t use this as an excuse to live in fear–just be prepared.

2. It’s Not Hard to Do

Why not have funds set aside in case you need them one day?

One of the biggest reasons people don’t create emergency savings funds is because they think it will be too difficult or will interfere with their lifestyle. This is not the case.

Building an emergency savings fund simply requires setting aside a small amount of money each month. Putting 5-10% of your monthly income into a savings account on the side will build up over time.

The end goal is to have about 9 months of savings in your emergency fund. Then, in case you need it, it’s there.

3. There Are No Drawbacks

Having an emergency savings fund can only help you. There’s nothing it can do to hurt you.

The small amount of money you set aside each month will not take away from your lifestyle, yet it will grow to be a large account over time.

What’s the worst that can happen? You never end up needing the funds and you have several thousand dollars set aside as a cushion?

One day, when the time is right, you can even feel free to spend or invest a portion of the fund. That’s one of the best parts of having this kind of savings set aside–it can only help and benefit you.

You may never need it–but if you do, you will be very happy to have it. And if you don’t, the money is still yours for the spending.

4. It Will Increase Your Status

The only way to lift yourself out of your current financial situation is to work hard to improve it.

Saving money is certainly easier said than done. However, if you ever want to rise above your current status when it comes to finances, this is how you can do it.

Having a rainy-day fund separates you from those who do not manage their money wisely. It means that when life happens, you are prepared. Curveballs will not knock you down.

5. It Eliminates Stress

Few things are more stressful than facing financial hardship on top of the situation that caused it.

Let’s say you or a family member are facing unexpected medical bills due to an injury, disease, surgery, or accident. Whether or not you have insurance, there are likely going to be some bills to pay at the end of it.

Having to stress about these bills on top of the illness leading to the bills is really undesirable. Having an emergency savings fund that will cover your expenses–in whole or in part–will allow you to focus on the main issue.

In the same way, you don’t want to worry about how to pay for food or housing in the case that you lose your job. You want to be able to use that mental energy to finding a new job and resolving your situation.

6. Get Out of Debt Faster

It may seem counter-intuitive, but have emergency savings set aside can actually help you get out of debt faster.

When you have 9 or more months of savings built up, it’s up to you whether you want to keep contributing to that savings account. You could choose to just keep adding more and more money in so that you are protected longer or for bigger crises.

If you decide to do something else with that small percentage of your income each month, you could put it toward paying off your debts.

Alternatively, if you are ever faced with needing to cut down monthly costs, you could take from your savings and put a large chunk down toward your outstanding debts.

7. Prepare for the Worst, Hope for the Best

Many people go through life believing bad things will not happen to them.

While you should not live in a constant state of stress and anxiety, you should know that major financial downfalls and disasters can happen to anyone.

This is a realistic way to approach life. You should be ready for the worst. Then, in case it does happen, you can lessen the blow.

And if it doesn’t, you’ll be all set–and with quite a bit more money to your name!

8. You’ll Live More Freely

It is painful to be tied down by money. Being held back from pursuing your dreams due to financial issues simply isn’t worth it.

When you have savings set aside, you will take more risks and feel more confident. Being scared of what will happen when a crisis occurs can be resolved with this type of savings fund.

Of course, life isn’t all about money. But being prepared and using your finances wisely will set you up for a happier and more fulfilling life.

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What If I Don’t Have an Emergency Savings Fund?

If you don’t have an emergency savings fund but find yourself facing an emergency situation, this is the worst-case scenario.

Not to worry, though. We can help.

Cigno Loans specializes in short-term cash advances in small amounts, up to $500. If you find yourself in need of a small bit of money to get out of a squeeze, contact us today.

You will move on from this situation having learned an important lesson, and we are available to help you in the meantime.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.


Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice – Moneysmart.gov.au.

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat