In the world of money management it is important to have an “emergency” fund. This is pretty well Whether you are getting out of debt, saving, or investing, we all need a certain stockpile of cash to go to when something happens. Maybe there is a trip to the ER, a leaky shower, or some sudden car work that needs to be done (all occurred to us this year). Even though the expenses weren’t planned, we had enough “go to” or “emergency” cash to cover those sort of emergencies.
In living a frugal sort of life, it is smart to have an “extra” fund as well. It doesn’t have to be as big as the emergency fund, nor should it be, but it should be a fund that you can contribute a little each month to.
Now what’s the purpose of the “extra” fund?
The extra fund would be the cash you pull from when you find something that is at an incredibly good deal, that isn’t budgeted for. For example, my kids needed more storage for their rooms. At Walmart last week, I saw that 3 drawer bins were on sale for 8 dollars each when they are regularly 12 to 15. Each of my 3 kids needed one. Although, they were all blue, I was able to spend 24 dollars on 3. However, if I didn’t have the “extra” fund, my budget would be thrown off for the month. Where that might be doable to borrow 24 dollars from the food budget, when you’re in the market for a couch or something that is more than you can float from one fund to the next.
Next time you are revamping your budget, consider the extra fund. It allows you to budget for those things you are looking for.