If you follow me onInstagram or Facebook, then you already know that we had some hefty expenses over the past few months. We knew that we would need new tires soon and that we were living on borrowed time with our roof. We were just hoping to wait as long as possiblebefore biting the bullet and spending all thatmoney.
I don’t know about you, but those are not items that I enjoy spending money on. They are necessary though and unavoidable if you own a vehicle and a home. If you aren’t prepared for expenses like this, they can devastate your finances. You may even end up slapping them on your credit card or taking out a loan with exorbitant interest charges. In my mind, neither of those options is ideal.
I wrote a post last year about the benefits to saving up for incidental expenses. I still stand by that post and hope that you might give the concept a try, if you aren’t already. You can’t predict the future, but you can anticipate it.
In order to help us save for those incidental expenses, we set money aside each month into an account we have recently dubbed our “slush fund.”
What is a slush fund?
A slush fund account is where you set aside money for expenses that you anticipate having in the future. This is different than an emergency fund, since that money is designed to be used only for catastrophic events (ex. job loss, huge medical emergencies, etc.).
While a slush fund is not your emergency fund, it still acts as a buffer between you and Mr. Murphy.
Getting Started
With most things in life, getting started is usually the hardest part. If this concept is new to you, then it will likely mean a change in behavior. It can sometimes be hard to get on a new bandwagon if you are set in an old habit or way of doing things.
1. Choosing your categories
Find a time to sit down and brainstorm what expenses you might want to include in your slush fund {include your spouse if you are married}. Take a look at your monthly budget categories and think about your upcoming expenses. You might consider dividing them up this way:
- Routine expenses {ex. school tuition, insurance premiums}
- Projected expenses {ex. medical/dental co pays, larger home/car repairs}
- Special savings {ex. new tires, new computer, newer vehicle}
At this point, our slush fund includes: home repair,car repair,vacation savings,preschool tuition, andmedical expenses. {I’m going to add in Christmas when we budget for August, so that I can start getting into the habit of saving all year for it.}
Note: At the very minimum, I’d recommend car and home owners to set aside at least a little bit each month for larger car/home repairs. Even if your car and home are newer, putting a little aside each month will help you be ready when you do need to make repairs.
2. Decide where you will put the money
Once you have an idea of what you should be saving for, you’ll need to figure out the logistics of where you will put the money. Think about what type of account you’d like to use and what bank.
We opted to use a basic, no frills, checking account at the same bank where we have our joint checking account for bill paying. This allows me to transfer the money over each month with the click of a button. If you aretempted to “steal” from your slush fund, then you might consider using a different bank. Do what works for you.
3. How much to save
Now that you have your categories, you’ll need to decide how much to save each month. It should be fairly straight forward for your routine expenses. Since you know what the expense is, just divide the total bill by the number of months you have to save.
If you are putting money aside for projected expenses, just estimate and then divide it by the number of months you have to save. You can probably look at last year and have a pretty good idea of what you might need to save.
When saving for specific items, you might also need to estimate. Unless you have a quote in hand, you might be making a ballpark estimate.
Even if your budget seems stretched already, I think you’ll find that setting aside even small amounts for some of these foreseen expenses will actually help alleviate some of the stress of your monthly budget.
Do you have a slush fund?
P.S. For more frugal family inspiration delivered to your inbox, subscribe to my email listhere.
photo source
Related Posts
- 4 Benefits of Saving for Incidentals
- The Teacher’s Salary Series: Budgeting for Christmas
- The Teacher’s Salary Series: Tithing/Giving
- The Teacher’s Salary Series: Handling Emergencies
FAQs
A slush fund is a sum of money that is set aside as a reserve and that is kept for no particular purpose. A lack of stated purpose and opacity regarding where its funds come from has led slush funds to be viewed negatively as a platform to potentially finance illicit or unethical activities.
What is the allusion of slush fund? ›
It did not take long, however, for slush fund to take on a new meaning, one that has very little, if anything, to do with the sale of leftover cooking grease. In the late 1860s the word began to see use in the sense “a fund for bribing public officials or carrying on corruptive propaganda.”
What is the meaning of Slushfort? ›
A slush fund is a fund or account used for miscellaneous income and expenses, particularly when these are corrupt or illegal. Such funds may be kept hidden and maintained separately from money that is used for legitimate purposes.
How much of a slush fund should you allow for a budget? ›
A slush fund, or a budget reserve for unexpected expenses, should ideally constitute 10% of your budget according to financial experts. This recommendation aligns with Paula Pant's advice on savings and the 20/50/30 budgeting rule, emphasizing the importance of having a financial buffer.
How do I start a slush fund? ›
Your slush fund should be in a separate savings account from your emergency fund. As a result, you should have a $3,000 emergency fund plus a slush fund of $30,000 for a total savings of $33,000. When contemplating how much to save in your slush fund, it is vital to consider the savings process one month at a time.
How much money is in the slush fund? ›
Further, states and local governments have obligated only 56% of the total appropriation for the $350 billion program. The new rule promises to give them more time and wiggle room to spend the money rather than return it to the federal government, which ran a deficit of about $1.7 trillion in fiscal 2023.
What does slush fund mean in politics? ›
What is Slush Fund? Definition and meaning of slush fund: A slush fund refers to a pool of money that is used for illicit or unethical purposes, particularly in the context of politics and governance.
Is an allusion a metaphor? ›
Allusions and metaphors are both powerful tools to help writers make their points more clear and vivid. But they are not the same! An allusion can be thought of as a poetic reference, where a writer references another work of literature such as a poem or novel.
What is an allusion statement? ›
Allusion is a reference to a well-known person, character, place, or event that a writer makes to deepen the reader's understanding of their work. Allusions aren't reserved for writing, though—we frequently use them in our speech. An allusion is a concise way to communicate a lot of meaning.
What is an example of a slush? ›
Slush is snow that has begun to melt and is therefore very wet and dirty. Becker's eyes were as cold and grey as the slush on the pavements outside. If you describe a love story as slush, you mean that you dislike it because it is too sentimental and cannot be taken seriously.
A slushy (also spelled slushie and less commonly slushee) is a type of beverage made of flavored ice and a drink, similar to granitas but with a more liquid composition. It is also commonly called a slush, slurpee, frozen beverage, or frozen drink.
What does paunchy mean for kids? ›
Definitions of paunchy. adjective. having a large belly. synonyms: abdominous, potbellied fat. having an (over)abundance of flesh.
What is the 50 30 20 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
What is the 50 20 20 rule? ›
Key Takeaways. The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
Is 50 30 20 rule good? ›
The 50/30/20 budget can be a simple and effective way to structure your finances. To get started, review your financial situation and goals, and come up with a formula that works for you. Whatever budgeting method you choose, it will only work if you stick to it.
What are differences between a slush fund and a petty cash fund? ›
A slush fund typically contains a larger amount of money and is used for larger, unplanned expenses. On the other hand, a petty cash fund typically contains a smaller amount of money and is used for smaller, day-to-day expenses such as office supplies, postage, or minor repairs.
What is a petty cash fund in simple terms? ›
What Is Petty Cash? A petty cash fund is a small amount of company cash, often kept on hand (e.g., in a locked drawer or box), to pay for minor or incidental expenses, such as office supplies or employee reimbursem*nts.
What do you mean by contingency fund? ›
Contingency funds are funds created to cope with any unforeseen scenarios or emergencies that a business may run into at any point in time. Businesses hold this fund in the form of liquid assets or cash.
How do you use slush fund in a sentence? ›
It will not be a political slush fund to help whichever political party may be in power. It would have to be quite a big slush fund. One could call it a slush fund or a hush fund. It became a slush fund for the owners of stately homes and other properties.
