Do You Have an Inconvenience Fund?

We all know that it’s important to have an emergency fund. If you have one, you’re much better off than you would be without one because it gives you a bit of a buffer in life.

But there’s more to life than the two extremes of regular expenses and emergencies. So, do you have an inconvenience fund as well?

An inconvenience fund is used for those pricey things that occur at unpredictable intervals, but aren’t really true emergencies.

Financial inconveniences include things like the washer or dryer kicking the bucket, running over some debris with your car and getting a flat tire, your pet taking sick, etc.

Some people just make their emergency funds extra large to cover these kind of expenses instead of having a separate fund (even if that separation is just on paper.)

I like to have completely separate funds though for psychological reasons. I don’t want to get in the habit of using my emergency fund for things that are just expensive inconveniences.

Having separate fund allows me to take care of life’s pricey inconveniences without violating the sanctity of my emergency fund — or using it and then not having it available when I really need it.

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10 comments

  • We have an Auto and Home account for maintenance issues that pop up (like my crappy Aveo’s themostat housing last week for $350). We also have a Vacation account that we’d hit before we move on to the emergency fund…

    These funds have kept us from needing the emergency fund for 3 years and counting. Good advice!

  • How about when a friend has a destination wedding that they plan only four months out? That’s an inconvenience;)

    We don’t separate the inconveniences from the emergencies or planned expenses, but it’s definitely not a bad idea. We’re working on tracking these kinds of expenses over time under a more generic category of ‘unplanned’. Should be interesting to see how much money is put into this category over the course of a year.

    • Michael, yeah that does sound inconvenient. Hopefully it’ll turn out to be fun though. Are you specifying what the ‘unplanned’ expenses are for when you track them?

  • Actually, the cash flow module we’re building on our site is setup so that each user’s cash flow is projected out 12 months at a time. We have them enter in their regular, recurring expenses and these are categorized as ‘planned’. After that, any unplanned expenses are detected because they’re not already in the cash flow forecast when the budget is reconciled.

    We’re still a few months out before we have this thing working the way we want, but it’s going to be a pretty useful tool. I would contend that under normal circumstances, budgets are broken more as a result of ‘unplanned’ expenses that really should have been included in the forecast.

    Usually when you use budgeting software or even an excel sheet (which my wife and I have used for years), you forget about those pesky expenses that occur each year like gifts, school fees for the kids, shopping for new clothes, etc.

    In your post, I like the idea of the inconvenient expenses because these things happen all of the time and are, in fact, inconvenient. If there was a way to track these over time, you could build in a cushion to your annual budget (setting it aside in an ‘inconvenience fund’ perhaps).

    The bottom line for me is that if you do a really good job forecasting, you’ll be more apt to stick with a budget because you won’t constantly feel like you’re failing at it.

    Actually, car repairs are one of those things that I’d love to be able to average out over a number of years to see how much it sucks out of our budget. It’s hard to say when the starter, alternator, or struts are going to go bad, but if you had an average to work off of, it would make these inconveniences so much easier to manage.

    Also, I really like the clean layout of your blog and particularly the Money Crush logo at the top. Very cool.

    • Michael, that sounds like a pretty cool tool. Annual or irregular expenses *are* often forgotten a lot, which probably contributes to people’s frustrated thinking that “budgeting doesn’t work”. It does work, it’s just that most people don’t persist long enough to get all the kinks worked out and all the forgotten expenses added in.

      Car repairs are especially tricky though, because in general people don’t keep their cars long enough to really get a good average.

      Thanks for the compliments about my blog. I had the logo done using a 99designs contest.

  • Hi Jackie, Very cool idea. I like the supplement to the “emergencey fund.” I’m going to add it to my link round up next week! Best regards, Barb

  • I have a separate car fund for things that I always forget and I have splurge fund so I can have some time off for fun. I also have a miscellaneous fund that works as my inconvenience fund so I don’t have to touch my emergency fund.