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Runaway funds – Should we all have one?

Runaway funds – Should we all have one?

Runaway funds – are they ok? 

When it comes to money and relationships a runaway fund appears to be a bit like marmite. Having spent some weeks considering putting pen to paper, I took the opportunity to chat to friends about their finances. A surprising number of them had a “stash of cash” while the others looked absolutely appalled at the very suggestion. Yet runaway funds keep cropping up as a discussion point during client meetings. Knowing the difference between an emergency fund and a savings account, and how to save for an emergency, should not be overlooked.

Some believe the very thought of a “runaway fund” is deceitful and pessimistic. Others would argue it’s not only sensible but essential. Whichever side of the fence you sit on, nobody can argue the importance of good financial planning to help you succeed in achieving your life goals.

So, is a  runaway fund cynical or a sign of a struggling relationship? Or is it about having financial freedom and security so that you have choices in case of an emergency?

Take a step back: emergency funds vs savings

That choice could be the ability to change jobs, take time out,  or just pressing reset if you need to start afresh. It could be something much less ambitious such as preferring to keep  a separate account so you don’t have to admit to the cost of your latest handbag, lotion, potion or the true cost hair appointments and Botox. The latter example is probably essential for many of us, as I must confess to a love of shoes and handbags. I would like to state that I am absolutely not condoning lying to a partner, but I am a firm believer in financial freedom, and I do manage my finances so that there is something for me.

I have never felt the need to lie about it but if you want to purchase your partner a gift, it’s nice to keep it a surprise until their birthday as opposed to paying for it out of a joint account..

What is a runaway fund?

No doubt everyone will have heard the words “rainy day fund” and as a financial adviser, I will always actively promote setting aside spare cash each month so that should the unexpected happen, you have something to fall back on. Whilst I have joked about spending money on handbags and Botox, essentially, a runaway Fund is about setting money aside on a regular basis and resisting the temptation to spend the money unless there’s a crisis.

Traditionally, in my experience, men claim that women are the spenders and men are the savers. This could just reflect me and my aforementioned shoes collection, but more and more women are asking about where to save and how to prepare of the future.

It doesn’t have to be for sinister reasons, but I do feel that there is an ever-increasing awareness that planning for the future is vital. Whatever the reasons, in recent months it has been women asking these questions.

Where do I start?

Before you rush out and open a secret bank account, follow our tips on what you can do to manage any extra personal finance into an emergency fund, even when money is tight:

  1. Think about what you are actually trying to achieve – how much do you need to save and by when? Figuring this out may even clarify the exact type of fund you desire. If you need help with conceptualizing your goals, it may be something our services can help you with.

  2. Complete a budget planner – Daunting as this task might be, it will help you see what you are spending and helps you identify areas that you are overpaying or in some instances still paying for. The budget needs to be realistic so don’t forget to include your amazon purchases, your daily coffee or your contactless payments as they all add up.

  3. Review household costs – with so many search engines out there to help, review each of your fixed household costs. From gas and electricity to sky and mobile phones, find the best deals for you and remember to check these regularly. With the threat of soaring energy costs this is essential.

  4. Reduce debts – where possible clear debts fully, pay off your highest interest debts first or switch these to a 0% card or lower interest rate. This is helping to reduce your monthly outlay.
  5. Think about the food shop –Rule number one, never shop on an empty stomach! Make a food plan for the week and stick to it as last-minute unplanned meals, takeaways or calling into the corner shop are likely to have a significant impact on your pocket. By planning and being more aware of prices in the supermarket, you could reduce costs. It’s also worthwhile trialling a different supermarket to see if your money goes further.
  6. Pay yourself on pay day – Once you understand your budget, move your runaway savings to a separate account on pay day. Preferably set this up so it is automatic and make it tricky to access. If you use internet banking and save within the same bank, it can be very tempting to transfer funds back to your main account the week before payday. Accessing this account should be for emergencies only and not new shoes.
  7. Check your account regularly – by following these steps you will begin to see fruits of your labour and there is not greater motivator than seeing the progress that you are making each week.

In times gone by, my nan used to get “housekeeping” from my pops. Essentially this was to feed the family and maintain the house, but there was always a secret jar behind the biscuit tin. Not because my nan was trying to run anywhere, she just wanted to look after her family and always have something spare in case they needed it.

Clearly my nan was a great financial planner, so whether you call your stash of cash a runaway fund or an emergency fund, or something even more elaborate; its ok to want financial freedom for yourself and family.

For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.


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