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Should You Have a Secret Fund?

By: Michael Millington

Having a budget can become an essential part of your money management behavior. Planning where every cent of your income will go can help eliminate debt and frivolous spending. Having an emergency fund can help you plan for unexpected rainy days. In the event that you need money for something serious, an emergency fund can alleviate the pressure of certain financial obligations that you might find yourself saddled with. But what about the smaller emergencies? There might be instances where you need money but you don’t want to use your emergency funds. If this is the case, what do you do?


What is a Secret Fund?


For the rest of life’s unexpected twists and turns, having a separate fund can be beneficial when in the midst of such a situation. Some emergencies are not as pressing as others and do not require a large sum of money to handle. For these lesser forms of emergencies, a smaller, secret fund can be helpful. This fund can be a finite amount of money (unlike the constantly growing emergency fund you keep) and does not have to have a purpose in mind.

While the exact amount can change based on your needs, having a fund that hovers around $1,000 can handle much of what you would need it for. The need can come from many different sources and might not even constitute as an emergency to many. The point of having a “secret” fund is to have a separate source of income to draw you away from spending money from your income, savings or emergency savings. Keeping those necessary funds stocked for the future can play a large part in your financial stability.

So what is a “secret” fund used for? It can technically be used for anything. Having extra money to use on anything can have an overall positive effect on your finances when you least expect it. When you need an extra amount of money to pay off a bill or to accommodate an impromptu trip, you have access to a fund that will allow you to continue to focus on your primary financial obligations with your primary sources of money.


How to Create a Secret Fund


Creating a secret fund might not be as hard (or perhaps stressful) as creating your budget, your savings or your emergency fund. Having these funds can be deemed as necessary as they directly impact your ability to manage your finances. Your ability to purchase a car or a house, open lines of credit or even retire comfortably is effected by your main funds. Your secret fund has not impact on these things because of its purpose.

How you save for this fund is completely up to you, as is the decision to replenish it. However, it does not take precedence over any other type of fund you maintain. Before you decide to create this fund, you must make sure you can budget its creation and that the other funds can remain independent of this one. Having your finances in order is critical towards making new deposits of money. Without a strong monetary structure in place, you can easily find yourself without funds and in debt.

Once you determine that you can comfortably establish and maintain an alternative fund, you can save for it with what is left of your income after all of your financial priorities are taken care of. Since this is a fund that you may need immediate access to, locking it up in a specialized savings account (like a CD) would not be beneficial. You can either keep it in your regular checking account, create a new checking account specifically for the funds, or just keep the money on you in physical form.


How This Fund Helps You


Having a fund that can be used for anything might feel different than the other accounts you have. Everything having a purpose might make this fund seem superfluous, but even the seemingly useless can serve you well in the grand scheme of things. As previously stated, this fund can be used for anything but does not take financial priority over your other obligations. This adds another level of discipline to what your previous levels of budgeting should have established.

Giving you a different financial focus for your everyday purchases can help to keep your spending habits on the straight and narrow as well. Even after establishing a saving mentality, the temptation might still exist to use money for the wrong reasons. Making a concession for a fund for frivolous reasons can provide a sense of freedom from any need to break your saving behaviors. Having a secret fund can even replace the need to have regular pocket money, acting as your everyday funds for anything you might need it for.


The creation and maintenance of a personal, “secret” fund can be hard, even for those who have other funds already set up. What would make the process even harder is the fact that most people who want to complete these endeavors have to deal with debt as well. If you struggle with debt and cannot get your finances in order because of it, do not hesitate to contact Guardian Debt Relief and see how we can help reverse your circumstances. Our debt specialists are trained and qualified to offer you advice and assistance. Take the first step and contact Guardian Debt Relief today.

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