How a 'splurge fund' makes money fun

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Money nerd confession: I loathe budgets. Instead, I’m all about automation, setting reminders and creating systems. My M.O. with money is “set it and forget it.” Instead of embracing a zero-sum budget, 50/30/20 rule, or some other popular budgeting method, I’m all about creating a financial flow.

So how do I avoid going over budget? I’d like to think I’m infallible when it comes to splurges, but I’m only human.

Enter splurge funds. By squirreling away little pockets of money in different accounts, I can spend on whatever I please. Sometimes I even forget I have money saved. They not only add an element of surprise to your financial picture, but helps you stay on course with your money goals.

Here’s why splurge funds are so great, and how you can start your own.

It nixes the guilt

There’s nothing worse than feeling like you’ve failed financially when you go over your monthly latte fund. When I had a budget with set amounts for each category, I felt bad when I was nearing my spending cap on, say, groceries. That’s mental and emotional energy I would rather spend elsewhere.

Since I’ve designated money for my splurges, I don’t have to worry whether I’ll be tapping into my budget for living expenses, or that I’m veering off track from my savings goals. I’ve built in a fund specifically for fun. Those impulse buys that would have led to regret become part of my intentional spending. Living the life of an ascetic hermit just isn’t for me. If I feel like blowing money on a fancy dinner, I’ll dip in to my surprise fund.

It gives yourself permission to have fun

There are people who live incredibly frugal existences so they can make progress on saving a down payment on a house, or to pay off their loans. I used to be one of those penny-pinching folks.

I didn’t buy anything frivolous the first year I was living on my own. Besides my basic bills, groceries and the occasional meal out with a friend, I didn’t spend a dime. And while I made serious headway on my emergency fund, I felt miserable. Looking back, I could’ve afforded the luxury of a new pair of jeans from time to time.

I’ve since learned to strike a balance. I still diligently sock away money toward my retirement and for quarterly estimated taxes, but I have also indulged in a fancy pair of boots or on-the-fly weekend trip.

If you’re itching to create your own surprise fund for splurges, here are some pointers.


After I’ve paid myself first for the big-ticket items (emergency fund, retirement, investing, a new car fund, and the most recent addition to my savings spread, a house fund), I autosave for different splurge funds.

I’ve saved up a decent amount for a fun fund, which I tapped into when I took a month off this summer.

Save overages from discretionary spending

I have a debit card just for discretionary spending. This includes groceries, eating out, social spending, Target runs and tea and snacks while working at coffee shops. Every month I set a certain amount aside for these expenses. If I come in under budget, I transfer the leftover money to my fun fund. Right now I have a little more than $100 I can spend on whatever I please.


I love Qapital. With this free savings app, you can set up a bunch of autosave rules. For instance, you can make a rule that if the temperature where you live spikes to more than 75 degrees a buck is autosaved into your Qapital account. I’ve used the Guilty Pleasure rule, so every time I use my card at In-N-Out, I save a buck.

One of my personal favs is the 52-week rule. With this rule, you can start small and save $1 the first week, $2 the second week, and so forth. Or you can start by saving $52 the first week, then work your way backwards. I’ve since saved for a writing retreat weekend, and am two-thirds along the way to save for an epic end-of-the-year trip.


While I haven’t used Digit to save anything in particular, I love how it automatically pulls money from my linked checking account based on how much I can afford to save. I may use it toward travel or a new car in the next year.

Start small

I know, you have more pressing priorities like rent, student loans and credit card debt. To get your splurge fund going, pick a savings method and commit to regularly autosaving a bit. When you can afford to sock away a bit more, the channels will already be built in.

Transfer money ahead of time

If I anticipate needing to pull money from a splurge fund, I’ll schedule a transfer a few days ahead of time. I know it takes a bit of planning, but that way I’ll be sure to pick money from one of these designated funds.

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