Meet the Urgency Fund: Your YOLO-Emergency Fund

As you know, an Emergency Fund is a key component of good financial management – a stash of money set aside to deal with the inevitable costly emergencies that come up through life.

Replacing a broken fridge out of warranty? Unexpected medical or vet bill? Need to move apartment quickly and payout your lease? Your Emergency Fund gives peace of mind and reduces financial stress when these hiccups happen.

While an Emergency Fund takes care of unanticipated negative events, I’m here to talk about the flipside: covering unplanned positive opportunities with an ‘Urgency Fund‘.

What is an Urgency Fund?

An Urgency Fund provides the financial potential to quickly act on joyful opportunities you didn’t see coming.

Money nerd that I am, I have pre-determined savings goals for specific future plans. As soon as my pay hits my account, I have direct transfers siphoning off money to different savings accounts – such as for upcoming trip costs, another music festival ticket, my next batch of shares, or distant house purchase.

In the past, making sure each dollar had an assigned purpose meant I didn’t leave much room for unplanned, expensive but YOLO-worthy fun. When a valuable opportunity arose, I would be left doing some complicated financial gymnastics to pull from other goal stashes or living costs to make it work – or have to pass on it.

I’ve now discovered the power of having an Urgency Fund! This has been a great tool in providing me the financial freedom to pursue these unanticipated but bound-to-be-memorable experiences.

How to keep an Urgency Fund

Similar to an Emergency Fund, it’s a good idea to keep your Urgency Fund easily accessible and separated from other pools of money to take advantage of opportunities quickly.

I keep my Urgency Fund in my Raiz micro-investing app (the Australian equivalent of Acorns USA). This way, my money can enjoy some growth in the sharemarket while being available 5-7 business days after withdrawal requests. I also like the ’round-up’ facility, which boosts my savings by rounding purchases made to the nearest dollar and adding the difference from my transaction account to my Raiz balance.

If you prefer, you might like to keep funds in a high-interest bank account, a 30-day term deposit (CDs for USA readers), or a peer-to-peer lender like RateSetter with one-month loans.

I make regular deposits into my Urgency Fund at each pay period, similar to my other savings goals. I like to contribute about $5/day or $35/week, which adds up to $1820/year. Add in $10 a week of round-ups on Raiz, that takes me up to $2340 annually.

When to use your Urgency Fund

Part of the joy of an Urgency Fund is you get to choose how to use it! It’s good to have an idea in advance of what circumstances you’d tap into it.

Unique travel experiences, arts festivals, and financial independence-related events are my jam, so I use my Urgency Fund towards unanticipated big-ticket items along those themes.

When I find a cool opportunity, I’ll give myself at least a few days to see if my heart is really set on it. I usually only tap into my Urgency Fund once every 12-18 months, so I don’t make those decisions lightly.

If it’s a ‘hell yes’, I use a points-earning credit card to purchase, then pay off the card balance before the due date from my Urgency Fund.

In the last few years, I have used my Urgency Fund for:

• Going to financial independence retreat Chautauqua in Ecuador 2016, plus tagging on a side-trip to Galapagos
• Signing up to Camp Mustache and CampFI events
• Attending a week’s fan trip hosted by a favourite musician, held in Havana
• Travelling interstate for a music festival with a perfect lineup I’d have curated myself

While I still keep savings accounts for existing travel plans and goals, my Urgency Fund is a source of joy allowing me to cover those rare, irresistible ’emergencies’ guilt-free.

Will you add an Urgency Fund to your money management plan? If you already have your own Urgency Fund, how have you used it? Comment below!