You probably know the drill of saving money for your financial needs such as rents, bills, retirement, child’s education, goals etc. But what about saving money just for your splurges? Think about all the spa days, dinners and drinks with friends and family, going to the movies, shopping sprees and other fun things you can indulge in. You need a fun fund, so you don’t dip into your savings for your needs.
So what is a Fun Fund?
A fun fund or a ‘ME Account’ is a fail-proof way to save money. In order to create a ‘ME account’, you will have to create a separate savings account which will be used for all leisure expenses and you should ONLY spend from that. This fund is the money you keep aside for whatever you want, whenever you want! To achieve this, all you need to do is follow the 50:30:20 rule of budgeting.
The 50:30:20 Rule of Budgeting:
– 50% of your income should go towards bills, utilities, rent etc.
– 30% towards shopping, outings, splurges etc. This is your fun fund.
– 20% towards your savings and investments.
Once you create your monthly budget, you need to pay off your bills, rent and utilities in the 1st few days of the month itself which is 50% of your income. You then need to schedule your investments and savings for the 1st week of the month. This is 20% of your income. Now all you need to do is transfer 30% of your income to the ME Account (i.e. savings bank account) This should be done immediately after salary comes in. A ME Account is essential to every woman. You have a separate account with funds to use, as it can liberate you.
Whenever you step out of the house, take this card with you!
You can also use the ME account to save and invest for your money goals if you wish!
Point to remember: While building your fun fund, don’t forget to save for your emergency fund too!
Smart Money February 23, 2024
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