How to Set Aside a Fun Fund

Spending your money on things you enjoy, like a trip, new technology, books, games, and so on, can decrease stress and inject some fun in your life.^[1] Spending money in this way, however, can put you in a bind if you don’t set aside a fun fund first. You can save money for your fund by doing things like putting aside a percentage of your paychecks or saving up loose change. As you accumulate money for your fund, you’ll have to decide how you’ll store it, like in a high-yield savings account. Once your fun fund is built up, you can enjoy spending it.

EditSteps

EditSaving Money for Your Fund

1. Put aside a percentage of your paychecks. If you’ve already made a budget, you should be able to easily tell what percentage of your checks go towards bills, living expenses, savings, and so on. At a regular interval, like for every paycheck or for your total monthly earnings, set aside a percentage for your fun fund.
   
   • How much you set aside will depend entirely on your personal situation. Putting aside even 5% – 10% will eventually yield a considerable investment in your fun fund.
   • Even if you have a lot of expenses and can only set aside 1% of your earnings, over time this will build up.^[2]
2. Save a specific amount each pay period or month. It may be easiest for you to deduct a flat dollar amount from each paycheck or your monthly earnings. Be consistent with you this technique. If you’ve decided to save $50 from each check, make meeting this goal a priority.^[3]
   
   • Although only saving $10 from each paycheck might not seem like much, if you receive a weekly paycheck, in a year you’ll have saved $480, which is enough for many domestic flights.
3. Cut expenses and save the difference. Ride your bike when traveling short distances instead of driving your car to save money on gas. Challenge yourself to not eat out for a few months. Use a library card to check out books, TV shows, and movies instead of paying for Netflix or cable. Put the money you save into your fun fund.^[4]
   
   • Figuring out how much you save by not doing activities, like not eating out, can be tricky. In these cases, determine how frequently you do the activity and how much you spend on average. After a month of going without, deposit the average you would have spent into your fund.
4. Build your fund with windfall money. A windfall is when you unexpectedly have good fortune. Windfall money might come from things like your birthday, a tax return, or gifts for special events, like graduation. Make it a plan to set aside some of this money in your fun fund.
   
   • You can apply the percentage or the flat amount saving techniques to windfall money, or you could invest the whole thing into your fund.^[5]
5. Pool loose change to build your fund. Get a change jar or a piggy bank and put loose change in it at the end of the day. Make it a rule to never remove money from your loose change reserve until you are ready to spend it on something fun.^[6]
   
   • Over time, your loose change will grow into a considerable amount, but if you’d like to speed up this process, you might consider putting $1 bills in your jar along with your change.
   • Keep an eye out for change that’s been dropped on the sidewalk. Loose change is frequently dropped and lost by passersby.

EditStoring the Money for Your Fund

1. Set a goal for your fund. As the saying goes, money can burn a hole in your pocket. You may find that you spend your fun money before it builds up enough to be useful. In this case, setting a goal for your fun fund can prevent you from spending it too soon.
   
   • For example, you might make it your goal to travel to Italy. In this case, you wouldn’t spend your fun money until you have enough for your trip.
   • Your goal doesn’t have to be trip or vacation related. Major family fun expenses, like a new trampoline or snowmobile, are also great goals.^[7]
2. Keep your fund in a normal checking account. If you put money into your fun fund regularly, or if you use your fund often for small treats, like dining out or small shopping sprees, you may want to store your fun money in a normal checking account. This will make it more accessible.^[8]
   
   • The downside to saving your fun money in a normal checking account is that this can sometimes lead to you spending your fun fund too freely.
3. Earn extra with a high-yield savings account. Many high-yield savings accounts will protect your principal investment while paying out higher interest rates or annual percentage yield. These accounts are often available through online and brick-and-mortar banks and credit unions. Shop around when looking for an account to find the right one for you.
   
   • Things to keep in mind while looking include the required initial deposit, minimum balance, rate of interest paid, setup and maintenance fees, required additional accounts, number of allowed transactions, method of deposit, and access to funds.
   • Be sure your account is FDIC insured if it’s with a bank or NCUA insured if with a credit union. This insurance will protect your money up to $250,000.^[9]
4. Invest your fund in stable markets that pay dividends. Use your money to produce extra income by buying shares in dividend paying stocks or a dividend ETF, which invests your money in common dividend paying stocks.^[10] This way, as you build your fund, you’ll receive a little extra income from the dividend.
   
   • It can sometimes be difficult to quickly liquidate money invested in stocks or bonds. If using this technique, you may want to charge fun expenses to a rewards card and, soon after that, sell shares to pay off the card.
5. Stash some fun money at home. Some establishments or activities only accept cash payments. In other situations, cash might be the easiest payment to use, like when splitting a bill with friends. Using cash when traveling can protect you from identity theft.^[11] Because of these reasons, keeping a portion of your fun money at home can be helpful.
   
   • The amount of money you keep at home will be completely up to your preference, but you might want to consider keeping enough money on hand for at least a fun night out.
   • Keeping money at home can put you at risk for theft. Buy a home safe or keep your money in a spot it’s unlikely to be found.

EditUsing Your Fun Fund

1. Take a spontaneous trip. Under booked flights oftentimes drop their prices last minute. Set an alert for cheap flights with an online flight tracking service, like Google Flights, Kayak, or Airfare Price Alerts. These flights might not offer you much time to get ready for your trip, so be sure you’re packed and ready to go.
   
   • If you have a long holiday coming up, you might make a plan to try to take a spontaneous trip. Set your alerts for flights for your time off, and wait patiently for the right deal.
   • Even using alerts, you’re not guaranteed to get your flight. Desirable destinations at high volume travel times rarely have cheap flights.
   • To further decrease your expenses on this trip, you might price check 5 to 10 locations that generally have reasonably priced airfare. Use one of these locations as your destination when buying your ticket.^[12]
   • Being flexible can improve your odds of finding a flight. Head to the airport and take the first cheap round trip flight you can afford.
   • Due to the fact that reasonably priced airfare may or may not materialize, you may want to have some alternative plans. You can always try to make a spontaneous trip again.
2. Upgrade your entertainment. Use your fun money to upgrade a media service to a premium account. Build your fun fund until you have enough to afford a new TV, speakers, a game system, and so on. Buy yourself a new pair of nice headphones.
   
   • If you don't have a TV that's compatible with your phone, use a device like Chromecast or Amazon Fire to transmit videos and music from your phone to your TV.
   • Your fun money can have a positive impact throughout the year when you invest in improved entertainment systems and accessories.
3. Revamp your wardrobe. A shopping spree can make you feel like a new person, and it can equip you with the wardrobe of a new person, too. Desirable window items might be outside your budget normally. Make one of these your fun money goal, and buy that article of clothing you’ve long wanted.
   
   • Visit your favorite stores and peruse their selection. Return to the clothier where you saw a trendy suit jacket and use your fun fund to buy some new threads.
   • To prevent overspending (or spending your entire fun fund), set a price limit on shopping sprees.
4. Invest in your hobbies. Hobbies can be a gift that keeps on giving. Buying a new set of hockey pads, for example, can last for years, making it an excellent long-term investment in fun. Board games can be enjoyed with friends and family members. Spend hours pleasantly assembling models. Other hobby ideas include things like:
   
   • Acting
   • Calligraphy
   • Poi
   • Chess
   • Drawing
   • Magic
   • Bird Watching
   • Camping
   • Ultimate Frisbee
   • Geocaching
5. Experience something you couldn’t normally afford to do. Go rock climbing at a local rock climbing gym. Gather a group of your friends to play paintball. See the world from above by going skydiving. Many of these activities can be costly and outside your normal budget. These activities are a great way to spend your fun fund.
   
   • The experience you choose doesn’t have to be physically demanding. You might use your fun money to pay for an architectural tour of a local city, for example.
   • Other ideas include SCUBA diving, taking a boat tour, getting a museum membership, signing up for a cooking class, and more.

EditWarnings

• The saving practices described are only a general rule to help you build up your fun fund. There are circumstances where you might have to put these fun fund saving measures on hold, like when a large unexpected expense occurs.

EditSources and Citations

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via Peter