The Fun Fund

Establishing a "fun fund" will help you in keeping on track with your financial goals. I used to be the type who would want to do something fun (hello, Spice Girls reunion?) and worried about how to pay for it later. This is a dangerous habit that may seem harmless now when we're young but can spiral out of control and lead to major debt later in life.

Set goals for yourself and include fun activities in those plans. I will always stress the importance of saving money in an emergency fund (this is a fund that totals 6-8 months worth of your crucial expenses in the event you lose your job or some other unforeseeable event).

However, it's also important to think about the fun things you'd like to do - life is too short to always be penny pinching. I've known people who saved like crazy for retirement their entire lives and never enjoyed the fruits of their labor while they were still young. I vowed to never let myself be one of those people with a long bucket list and panicking by the time I was 70 because I never did any of it.

My boyfriend and I have recently set up what we call a "fun fund" for big expenditures. This fund is purely made up of money we were not expecting. We put spare change in there, and since he works in a restaurant, all his loose $1 bills that he gets from tips go in there as well. I've started on a cash budget for things like going out to eat, clothes, groceries and other household items. Anything left over at the end of the week goes into the fun fund. Money you make by selling something on ebay or if you have a garage sale can also go in there. The point is to pay for whatever it is you're planning on, without drastically changing your lifestyle.

If you're diligent, the money adds up fast. We have a couple of goals including trip to visit friends in San Francisco and tickets to a weekend music festival. Stay tuned to hear about our progress and chime in with your own!