How to Build a Guilt-Free ‘Fun Fund’ for Life’s Little Luxuries
Many of us focus our financial planning on necessities and long-term goals like saving for retirement or building an emergency fund. But what about the little luxuries that make life enjoyable? Whether it’s a spontaneous dinner with friends, a spa day, or tickets to your favorite concert, these experiences can add happiness and balance to our lives.
Creating a “fun fund” is a way to save specifically for these small, guilt-free indulgences without compromising your other financial goals. In this guide, we’ll walk through the steps to set up your own fun fund, find room in your budget, and enjoy life’s luxuries responsibly.
What is a ‘Fun Fund’?
A fun fund is a small, designated savings account for life’s little luxuries. Unlike an emergency fund or retirement savings, which are essential and long-term, a fun fund is for the “extra” things that bring joy and variety into your life. It’s about being intentional with your spending and enjoying your money without guilt or feeling like you’re sabotaging your financial health.
Why a Fun Fund is Important
In a world where we’re often told to save every penny, a fun fund is a reminder that enjoying life is also a valid financial goal. Here’s why creating a fun fund is worth it:
Balance and Well-Being: Treating yourself can improve mental health and overall well-being. Small luxuries can be restorative and rewarding, helping you feel more balanced.
Avoids Impulse Spending: Having a fund specifically for personal enjoyment helps reduce unplanned or impulsive purchases that could lead to overspending.
Increases Financial Mindfulness: A fun fund encourages intentional spending, helping you feel in control of your finances while still allowing room for enjoyment.
Step 1: Assess Your Budget and Define Your Fun Fund
Before diving in, take a look at your current budget. Understanding where your money is going will help you find areas where you can redirect funds to your fun fund.
How to Define Your Fun Fund Amount
Decide how much you want to allocate to your fun fund based on your financial situation. Here are some tips to help you define your budget:
Start Small: Begin with a modest amount, such as 3-5% of your monthly income, and adjust as needed.
Think of It as a ‘Joy Percentage’: If your income allows it, consider setting aside a small percentage, such as 2-10%, of each paycheck for your fun fund. This keeps it manageable while providing a consistent allowance for your enjoyment.
Make It Monthly: Set up a recurring monthly transfer to your fun fund to keep it growing steadily. For example, if you budget $50-$100 each month for your fun fund, you’ll have enough for meaningful indulgences without impacting your essentials.
Step 2: Separate Your Fun Fund from Your Main Accounts
To make your fun fund effective, keep it separate from your primary checking or savings account. This separation helps you avoid dipping into it for everyday expenses and keeps your fun fund specifically for its intended purpose.
Tips for Separating Your Fun Fund:
Open a Dedicated Savings Account: Choose an online savings account or a no-fee checking account specifically for your fun fund. This account should be easy to access but separate from your main accounts.
Use Cash or a Prepaid Card: If you prefer a tangible approach, withdraw your monthly fun fund amount in cash or load it onto a prepaid card. This makes it easy to see exactly how much you have left.
Try a Savings App: Apps like Qapital or Digit allow you to set specific savings goals, so you can create an automated fun fund that grows each month with minimal effort.
Step 3: Find Room in Your Budget for Your Fun Fund
If your budget feels tight, there are ways to make room for a fun fund without sacrificing essentials or long-term savings. Here’s how:
Look for “Lifestyle Creep”
Lifestyle creep happens when your spending increases as your income grows. Review your budget to see if there are any areas where spending has slowly increased over time. Reducing these can free up money for your fun fund.
Cut Back on Low-Priority Expenses
Look at your budget for small, regular expenses that don’t bring as much value to your life, such as subscriptions or eating out too frequently. Reducing these can provide extra cash for your fun fund.
Use the “Round-Up” Technique
Some savings apps offer a “round-up” feature that rounds up your purchases to the nearest dollar and deposits the difference into a savings account. This small but steady saving method is a great way to add to your fun fund without feeling the impact.
Set a “No-Spend” Day Each Week
Dedicate one day each week to no unnecessary spending. For example, skip your coffee run or pack a lunch for work. Every time you complete a no-spend day, transfer that money into your fun fund. Over time, this can add up to a nice amount without significantly impacting your budget.
Step 4: Prioritize Essential Savings First
Building a fun fund is great, but it’s still essential to ensure your primary savings goals are covered. Here’s how to balance both:
Emergency Fund Comes First: Make sure you have a basic emergency fund in place before creating a fun fund. Aim for at least 3-6 months’ worth of expenses.
Match Your Fun Fund to Long-Term Goals: For every dollar you put in your fun fund, consider matching it with a contribution to retirement savings or other long-term goals. This keeps your future savings aligned with your current enjoyment.
Review Your Budget Regularly: Financial priorities change over time, so it’s a good idea to review your budget every few months. Adjust your fun fund contributions if needed to stay on track with all your goals.
Step 5: Track and Enjoy Your Fun Fund Guilt-Free
Tracking your fun fund spending can actually make your experiences more enjoyable, as it reinforces the value you get from these little luxuries.
Tracking Tips:
Use a Simple Budgeting App: Apps like Mint or YNAB let you categorize fun fund expenses, so you can see exactly where your fun money is going each month.
Reflect on Your Spending: At the end of each month, take a few minutes to reflect on how you spent your fun fund. Did it bring joy? Are there adjustments you’d make next month?
Avoid Overthinking: Remember, the fun fund is specifically meant for enjoyment, so don’t overanalyze each purchase. It’s okay to spend guilt-free on something that brings happiness.
Fun Fund Ideas: What to Save For
If you’re unsure where to start, here are some fun fund ideas that can add joy and variety to your life:
Small Weekend Getaways: Plan a mini-vacation or a weekend trip with friends or family.
Dining Experiences: Treat yourself to a dinner at a new restaurant or a food tasting event.
Self-Care Days: Use your fun fund for spa treatments, massages, or beauty products you’ve been wanting to try.
Classes and Hobbies: Take a cooking class, buy art supplies, or sign up for a workshop in something you love.
Entertainment: Go to a concert, theater performance, or buy tickets to a movie you’re excited about.
The Mindset Shift: Why Enjoyment is Part of Financial Health
Building a fun fund isn’t just about setting aside money for indulgences—it’s about giving yourself permission to enjoy life within your financial means. This mindset shift is empowering, helping you feel in control of your money and reminding you that personal spending is a valid part of financial health.
When you allocate money specifically for enjoyment, you create a healthy balance between living in the present and planning for the future. A fun fund supports this balance, allowing you to experience life’s little luxuries guilt-free while staying responsible with your finances.
Final Thoughts: Start Small and Grow Your Fun Fund
Creating a fun fund is an empowering step toward financial independence and happiness. It’s a practical way to plan for enjoyment, keeping you on track with financial priorities while still celebrating life’s pleasures. Start with a small amount, build the habit, and remember that personal spending is not just okay—it’s essential for a well-rounded financial life.
With a dedicated fun fund, you can treat yourself to the little luxuries that bring joy and variety to your life, all while feeling in control of your financial future.