The Money Marathon – Have a Fun Fund
Continuing with our Money Marathon series, today we’ll go over something that is more fun instead of more work.
When training for a race, it is essential to maintain at least 100% desire to go out there and train. One of the experts once said that if you ever feel yourself falling below this threshold you should immediately take a week off from training and just relax. This would allow you to reenergize and be ready again to train with full enthusiasm.
I’ve turned this around for the Money Marathon and call it the Fun Fund. Everybody should have a fun fund to make personal finances more fun and to have a way to reenergize your desire to continue with the Money Marathon.
What is a Fun Fund? A Fun Fund is an account you set up to hold money that you can do anything fun with and feel zero guilt about it. Do you want to buy that big toy? Do you want to take that weekend trip? Do you need that gizmo you wanted since childhood but never received?
You can use the Fun Fund money to do any of the above.
How do you set up a Fun Fund? You should set up the Fun Fund as a savings account with no restrictions. Look for an account that has no minimums, no limits on how many times you deposit or withdraw money, and lets you set up withdrawals from your other accounts. Once you have set up this account, write down the account number and the transfer number and keep it handy.
How and when do you contribute to your Fun Fund? As a general rule, you should add to the Fun Fund whenever you have any kind of windfall. Let me give you some examples:
• If you receive a 4% raise at work, take .5% and automatically redirect it to towards your Fun Fund and the rest to your investments account
• If you find a way to cut 5% of your monthly costs, then redirect 4% to your investment accounts and 1% to your Fun Fund
• If you’re refunded $400 on your taxes, enter your Fun Fund account number to have the money sent straight there
Why set up a Fun Fund? Setting up a Fun Fund will allow you to be more enthusiastic about savings, investing, cutting costs and so forth, because you’ll be sending a portion of the proceeds to your Fun Fund. Another big reason to do this is that you will not destroy your budget by making impulse purchases, because you know that you can always buy something that you really want from your Fun Fund. Having this ability to reward yourself will help keep you on track with your money marathon training without derailing your efforts.