The “Slush Fund” Explained – How to Avoid Busting Your Budget

I’ve been preaching the sinking-fund gospel for years now. However, I forget to sometimes share with you our family’s little hidden secret. So, you know that I’m a fan of having a Fully-Funded Emergency Fund. But I’m also a fan of being super real and honest with your money. I mean, life happens and sometimes you make a budget “oops”. What are you supposed to do when you make those mistakes? For us, we have what we call our “Slush Fund”. This is like your spare change account – in fact, our bank account that holds our Slush Fund is one of those “keep the change” style accounts!

We’ve had this account for years and no, it’s not used for illicit purposes. The first time I shared about this account I had a few people message me to tell me that typically a Slush Fund means money to be used for no good purposes. Don’t worry, that’s what I’m talking about. For us, our Slush Fund is a buffer account between our Emergency Fund and our checking account (where our household budget is). 

This account was never meant to save our family in the event of a true emergency. That would fall under the job of our Emergency Fund. So, if you’re wondering how to keep budget mistakes from derailing your well-laid plans, click here to watch this super quick video that goes more in-depth on how we use our Slush Fund!

To recap:

• The Slush Fund is not your Emergency Fund. It should not be used for emergencies (unless you end up draining the EF and have no other choice). Just like Sinking Funds each have their own job, the Slush Fund has its. Let’s let our bank accounts serve their intended purposes.
• This account needs to be liquid (meaning it’s not invested) so you can access it quickly.
• The purpose of the Slush Fund is to be a buffer between your household budget and your Emergency Fund. This buffer is extremely important when you’re first learning how to budget.

Let me know! Do you have a Slush Fund? Or how do you keep budget mistakes from derailing your plans?

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