• Great Companies

3 Surprising Benefits of Rainy Day Funds


Jun 9,2017

Business world is full of opportunities and threats but the ice on the cake is that such opportunities and threats are uncertain and dynamic. Every business organization should stay prepared for these situations. Due to intense competition, small business organizations are the one who are most affected by such situations. To avoid unpredictable threats and exploit opportunities, small business owners should keep enough resources in reserve so as to face the uncertain situations without affecting daily operations. Such reserve fund is often called Rainy Day Fund. All business owners should keep Rainy Day Fund to be used in times when regular income or revenues do not match expenditures.

Studies reveal that keeping Rainy day Fund helps small business organizations to develop as they perform better than those who do not keep Rainy Day Fund, in difficult situations. In many cases, Rainy Day Fund are often used interchangeably with Emergency Fund but both these terms are different in certain ways. An Emergency Fund is kept in order to have enough money to pay expenses for a period of three to six months. On the other hand, Rainy Day Fund is kept to face unforeseen situations or events. In brief, these two savings accounts are different in their amount value, purpose and usefulness. Moreover, a Rainy Day Fund is comparatively smaller than Emergency Fund.

There are many benefits of keeping Rainy Day Fund:

  1. Rainy Day Fund provides liquidity of fund during emergency period. During the time of recession in the industry, Rainy Day Fund can prove beneficial.

  1. Rainy Day Fund provides security against uncertainty of future. Small Business Owners have to face a lot of problems in their business. In such situations, Rainy Day Fund provides relief to stress.

  1. Rainy Day Fund provides courage to small business owners to take risks as they don’t have to worry a lot about future. This helps them in exploiting the growth opportunities which they otherwise would not have been able to do so.