I\u2019m an early riser, especially on a workday.\u00a0I prefer to beat the traffic and get in early to enjoy my coffee and catch up on current events.<\/p>\n
As I\u2019m getting ready this morning, imagine my dismay as I realize that my shower is ice cold.\u00a0Thankfully I always check the temperature before I step in!\u00a0I head down to the basement, hoping nothing is seriously wrong.\u00a0Water is spewing out everywhere and my utility room is soaked.<\/p>\n
We can all agree that these issues never come up at a convenient time, and this early morning issue was no exception.\u00a0My husband and I sprang into action and took care of the immediate need:\u00a0shutting down the water, making sure nothing was damaged.\u00a0Then the worry sinks in:\u00a0how long will we be without hot water?\u00a0In the era of supply chain shortages, when will a repair or replacement happen?\u00a0To add to our worries, we have company coming to stay for the week.<\/p>\n
The one thing I didn\u2019t have to worry about was the bigger issue of how I was going to pay for the repairs or replacement.\u00a0Why wasn\u2019t I worried?\u00a0Because long ago, I implemented a reserve fund.<\/p>\n
In its simplest terms, a reserve fund is a cash flow planning strategy which involves periodically setting money aside for a major expense.<\/em>\u00a0This is a wise financial decision whenever you have a major asset, such as a property or a vehicle.\u00a0It is inevitable that major expenses or the costs of upkeep are going to come up. The best course of action is to set funds aside regularly, in anticipation of these costs, versus trying to come up with the funds when an event has occurred.<\/p>\n What types of expenses can I set up a reserve fund for?<\/strong><\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Home Repairs<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Home Renovations<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Vehicle Expenses<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Major Holidays<\/p>\n I currently have two expense reserves:\u00a0major home expenses and vehicles.\u00a0In the past, I\u2019ve had an expense reserve for parental leave and for planned vacations.<\/p>\n