Fearless Finance knows stuff comes up. We want you to have a certain amount set aside for unplanned, required expenses like car or home repairs or unplanned, unreimbursed medical bills. Those are Rainy Day expenses. We recommend you "seed" your Rainy Day/Annual Needs savings account with $3k if you are a home owner and $1500 if you are a renter. Each month, you also save for your Annual Needs into this account. That way, if you use some funds for a Rainy Day expense, they are replenished quickly by your monthly Annual Needs savings.If you end up having less in Annual Needs in order to make sure there is always about $3k ($1500 if you are a renter) in that account, you have to adjust your expectations for a vacation or some other flexible expense.

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