This is another post for Women's Money Week. Today, I look at the merits of building a fun fund.
One of the best ways to ensure that you have money to do what you enjoy is to build a fun fund.
Your fun fund should be all about enjoying the moment, and doing what you like best. A good fun fund can be a way to be spontaneous as well. Too often, we get caught up in planning where every dollar goes. When you splurge, it's too easy to feel guilty.
Instead, build a fun fund that you can draw on for the things you like.
What Can You Use for a Fun Fund?
There are a number of strategies you can use as you build your fund fund. One of them is to just keep the money in a high-yield savings account. You can set aside a certain amount of money each month, and build the fund, and then draw on it when you have unexpected fun things to do. If you create a budget, the fun fund is an outside item — something you tap beyond your regular budgeting for eating out or your short-term vacation savings goal.
Another idea for your fun fund is to build it up using income-type investments. Build your fun fund by holding it in a low-cost brokerage, and then adding to it regularly. Choose income investments like dividend stocks and bonds for your fun fund. When you receive income from those investments, reinvest it.
One way to build a fun fund using investments is to use a site like Betterment. While I just have retirement with Betterment, you can use the brokerage for other goals.
Your investment fun fund can grow at a more rapid pace (but you have to watch out for losses, too, since that is a risk) and provide you with additional abilities to splurge. Whether you want to use your fund for hobbies, or just for the occasion fun activity outside of your spending plan, a fun fund can be a great way to go.
What do you think? Is it a good idea to build a fun fund?
Read more posts on fun, happiness, and hobbies at Women's Money Week.