What Is a Slush Fund and How To Use It Successfully

Do you use a slush fund with your monthly budget?

They can be a great reward when you’re working hard on paying down debt and saving money. A slush fund is simply an account with no real purpose.

No purpose?

Yes.

Meaning it’s an account that can be used for fun moments, spontaneous days and unplanned events. Slush funds aren’t necessarily for bills or debts or boring monthly budget expenses. The funds are for those moments you want to grab the kids and go to the water park for a fun day.

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A slush fund is created with extra money you have at the end of the month. Since you’re supposed to be budgeting to a zero-based budget each month, you shouldn’t have a lot of money leftover. However, when the times come where you don’t use all your grocery money or gas money then you can transfer it into a slush fund.

Again, it won’t be a lot of money and you may not have money each month. So building a slush fund is a slow process. You should be focused on paying down debt, but after months of being so laser focused you can get frustrated and burnt out. That’s when it can be the perfect time to use your slush fund. You can have a little fun while not throwing your whole money plan off track.

Now don’t confuse a slush fund for a sinking fund, which is more for larger bills that are due only once or twice a month.

If you have any questions about a slush fund, make sure to leave a comment down below.

Need more help?

For more help with your budget, check out this sinking funds spreadsheet. It’s a great tool to help you create a system to keep track of your sinking funds to make sure no larger bills or annual expenses throw you off.