Setting Aside Money for a Sunny Day
We’ve all been taught to save funds for unexpected expenses, and usually associate these with detrimental events such as being laid off, having to make a significant home repair, or travel to visit a loved one who is seriously ill. Perhaps inspired by the heatwave we have been experiencing in Britain over the past few weeks, I would like to invite you to consider deliberately setting aside some cash for unexpected positive opportunities that might arise. Been invited to go on a weekend away, attend a concert or just to scope out the new fancy restaurant that opened locally? Imagine being able to look at the balance of your Sunny Day fund and say “Yes, great, I’d love to.”
Potential Benefits of a Sunny Day Fund
● You get to do really fun stuff. What’s not to like?
● It might help encourage reluctant savers to establish a savings habit. It’s like a benevolent gateway drug–think carrot vs. stick. Once you have a few wins with this, being able to accept that last minute invitation to join friends for an evening out, the feel good factor should make it easier to stick to the new habit. Having begun to exercise your saving muscle, you might find it easier to be more disciplined in other forms of saving.
● It can conversely help people who are reluctant to say yes because they are worried about how this might affect their financial safety net. This kind of fund can act as a ballast for your other savings, particularly your rainy day or emergency savings, by providing a source of funds for opportunities that are just too tempting to pass on. Now you have a designated pot that you can tap guilt free without taking away from other priorities.
How to build a Sunny Day Fund
1. Ringfence If you use an online budgeting tool, go ahead and create a new “Sunny Day” category in the budget. Decide how much you are going to allocate and put that money in there at the next opportunity (many people assign money to budget categories on a monthly or per payday basis).
If you bank with a platform that allows you to set up separate saving “buckets” in your account, go ahead and create a Sunny Day bucket. Ally is one example of a bank that offers a High Yield Savings account with this feature in the US. In the UK you could try Monzo, Starling, or Revolut. (Fyvie Financial LLC has no affiliation with any of these institutions).
2. Identify Plan ahead for what counts as a Sunny Day item. One example might be an unexpected opportunity to travel or a band that you love announcing concert dates in a town near you and sales go live tomorrow! I once had an opportunity to purchase a limited edition sports car (that unfortunately I had to pass on).
3. Taste test Unless you are just the kind of person that has unlimited patience and ability to delay gratification until you can pay cash for that sports car, go ahead and say yes to yourself early in the process. Got an unexpected midweek invitation for drinks after work, lunch out or to attend a sporting event? Say yes. Enjoy it.
4. Keep at it Use the pleasure of having enjoyed saying yes to encourage you to keep setting aside money for future, possibly pricier, events or big ticket items.