It's Time to Start Saving for a Sunny Day
So, you’ve got your rainy-day savings sorted. Great work!
But what about an account dedicated to saving for the good things in life?
Emergencies aren’t the only things in life that can cost a pretty penny. Some of life’s happiest moments can take a huge chunk out of your paycheck. That’s where a sunny-day savings account comes in.
What’s a sunny-day savings account?
A sunny-day savings account allows you to budget and save up for the good things in life, such as a wedding, a new home, or a dream vacation. It can be rather gloomy to only consider rainy-day accounts – so why not create a secondary account that gives you the flexibility to splurge on your bucket list goals?
"A healthy relationship with money isn’t just about budgeting and saving and investing for the future. It’s also about supporting a meaningful life in the present, which includes occasionally spending money on the things that improve quality of life."
Timothy Iseler, Founder of Iseler Financial, LLC
Why should you open a sunny-day savings account?
The saying goes that money can’t buy happiness – but that’s not necessarily true. It just depends on how you spend it. Some of the most cherished experiences in life – such as having a baby – cost a whole lot of money. That’s why it’s important to dedicate an account to saving for those goals alongside your rainy-day savings. That way, you have funds to draw on whether it’s a trip to the hospital or a trip to the Bahamas.
"A sunny-day savings account has two benefits. For one, it allows you to treat yourself to guilt-free fun. The other big advantage is having a second savings account."
Shawn Plummer, CEO at The Annuity Expert
Make sure to open an account with a high annual percentage yield so that you can earn as much interest as possible on your money. Decide the specific amount of money you want to save, and then calculate how much you’ll need to contribute each month to reach that goal. Set up an auto-deposit of a predetermined amount each month, and over time you’ll have yourself the perfect nest egg.
A word of caution, though: It’s easy to let the “treat yourself” mentality of a sunny-day savings slip into a retail therapy habit. You should still treat the account as you would any other savings account – but this way, you’ll properly budget instead of blowing your money all in one go.
What can you use a sunny-day savings for?
1. Your Wedding Celebration
It’s never too early to start saving for your wedding. It could be one of the most lavish events you’ll ever pay for, costing the average American $34,000.
Not getting married, but know someone who is? Expect to shell out a decent chunk of cash on flights, hotel rooms, and transportation. If you’re a member of the bridal or groom party, that cost can be $1,000 or more.
Whether you’re a wedding guest or the future spouse, setting aside a budget for such a momentous occasion is key. After all, a wedding is a celebration that you’ll want to be in the moment for – without money worries clouding your experience and memories.
2. Your Dream Vacation
Did you know that the typical American anticipates spending $2,000 on vacation? And depending on where you’re flying, you could be paying that price for airfare alone. If you have a dream destination in mind but no clue how to make it financially feasible, a savings account dedicated to your trip is the best place to start.
Everyone needs a vacation, so don’t let money be the biggest obstacle to your rest and relaxation.
3. Your First House
A house is one of the most expensive investments you will ever make, so you likely want to invest in a home you love. That can mean a rather big price tag and hefty mortgage. Due to rising inflation, the average cost of a home in the U.S. has reached $348,079 – up 29% from 2020. Even if you don’t plan to buy a house for years to come, creating a savings account will give you more flexibility to make homeownership a reality.
4. Your First Pet
When looking for a new furry friend, you’ll want to budget at least $5,000 – because let’s face it, they don’t pay rent. The cost of owning a pet can get high, especially if they run into health problems and you don’t have pet insurance. Don’t let money become a barrier to your dream of having a fur baby to spend your days with. Instead, save up over time so you know you are financially ready for when the day comes.
When it comes to what brings you joy in life, don’t let buyer’s remorse hold you back. Whether it’s a new car, fancy toy, or throwing a baby shower, a sunny-day savings account lets you enjoy the good things in life sans stress.
It’s Time to Start Saving for a Sunny Day
This blog post was published by Axos Bank on July 20, 2022, and last updated on July 20, 2022.