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Anne Zimmerman

Anne Zimmerman

July 7, 2015

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Start a Fun Fund

Every financial analyst worth her salt will tell you that you need to put some money into a savings account each and every month. But have you heard about this new twist on that monthly transfer? It’s called the Fun Fund, and it’s just what it sounds like. Each month you squirrel money away for a big event in your future: wedding, baby, dream vacation. The logic is if you have a secret stash you’ll be able to spend above and beyond your budget. Here’s how to make it happen.

Start socking it away. Hopefully you’re already putting some of each paycheck into a savings fund. But often this money serves as a nest egg. You try hard not to spend from your savings unless you need a lump sum of cash for a big financial event: a down payment, plugging your Roth IRA, or taking time off while you transition to a new job or city. If you start a Fun Fund you’re putting away money that you plan to spend on life’s more exciting times. This fact alone should motivate you to save money and plug the fund as much as you can.

Rationalize. Feeling a little guilty that you’re saving all this money to spend on yourself? Don’t. Being able to really contribute to life’s biggest events will make you feel confident, secure, and independent even in the midst of some very big changes. Plus, splurging every once in a while is fun, especially on those “once in a lifetime” moments.

Check your head. But before you get too excited about your fund, consider this: Focusing too much on events like weddings or babies before it’s time can make you slightly obsessed. This is hardly ever a good thing. Fixating on wants and dreams that are just beyond your reach can make you feel foolish and inadequate. These are not good feelings to have hanging around on a monthly basis. So if you decide not to plug the fund and instead spend the money on something fantastic that you can enjoy right now, it’s no big deal.

Be smart. When it comes time to spend the fund, enjoy it but don’t feel like you have to spend every last penny. After all, anything that is left over can become the down payment for the next fund. And be honest with your partner. Maybe he’d like to start one too…after all, it does take a while to save the cash for an engagement ring or European vacation. And two funds are always better than one.