How about an emergency fund that’s fun to save for?
By Allie Johnson
July 2, 2014
Everyone knows that having an emergency fund is important, although socking money away for burst pipes or car transmission failures is no fun.
But recently I discovered the idea to start a twist on an emergency fund called a “freedom fund.”
Just as catastrophes happen in life, so do opportunities. But it can be easy to pass them up due to lack of money or time.
I sometimes find myself stressing out when I get a spontaneous invitation — for example, to visit a friend in another city — that’s not in the budget. I’ve also dismissed or put off dreams due to money. (I’ve been saying for years that someday I’ll take a week off for my own little writer’s retreat and work on essays by the beach.)
It’s funny, but I got the idea for a freedom fund while watching too many episodes of “House Hunters International.” Seeing couples do things many people only dream of — moving to places like Italy, Costa Rica and France for a year or more — got me thinking. In many episodes, the house hunters mention having saved up to pay for their experience. In one episode, a couple of pro bloggers had created a fund to move to Colombia and find online work.
So, I pitched the idea of a freedom fund to my husband, Joe, and he loved it, partly because it makes saving a lot more fun. It’s pretty easy to put money away when you know its sole purpose allows you the freedom to enjoy life more, do what’s important to you and fulfill goals.
I immediately started an account and made some cuts to our budget. We’re adding the money we save from the budget cuts each month, and we will sock additional money away whenever we can — for example, if we get a small windfall or sell something on Craigslist.
On the personal finance blog Get Rich Slowly, Lisa Mueller explains that it took her a while to realize that saving, in addition to being a way to build wealth, can be a path toward freedom and flexibility. For Mueller, a freedom fund has allowed her to:
- Quit a 9-to-5 job.
- Take a class.
- Take time to think about what she wants out of life.
- Enjoy the summer.
- Connect with friends.
That’s exactly what I’m hoping to get out of our fund — to make our money work for us a little more instead of the other way around.
Blogger Jay at The First Million is the Hardest writes that he saved for a long time without knowing what he was saving for. Then he started a freedom fund with the aim of quitting his 9-to-5 job. He plans to invest his money to build an income stream that could replace his salary.
Alexa Von Tobel, founder and CEO of the personal finance site LearnVest, writes at Inc.com that her freedom fund allowed her to launch her business.
The possibilities of a freedom fund are unlimited. I’m a freedom-fund newbie, but I think everyone should start one. If we have to save for brake pad replacements and the like, we also should stash money away for the stuff that feeds our souls.