Personal Funds

Having money when you need it can have a huge impact on your life. It means that when unexpected expenses appear it will not be a risk and when opportunities appear in your life money will not hold you back. To be able to manage expenses that weren’t planned we need savings, but we can easily lose track or forget the purpose of the savings when we just stack it on our bank account. It could even be demotivating to start saving when we don’t see why we are doing it. Let’s do something different with our savings, let’s give it a purpose!

We all know that it’s good to have savings, we also know that it’s good to eat broccoli, but that doesn’t mean that we automatically do it as much as we should. We just keep saving or maybe we are not even saving at all, but why should we save money? What exactly is the savings for? We maybe know that we want to be able to buy a house someday or we just want to travel somewhere, but do we know how much money we need to save? Everything is often just a blur and we keep saving because it’s good, or we don’t save because why should we when we’re having fun with my money now. Let’s make our savings a bit more concrete by labeling them, let’s create personal funds! There are two basic funds that will give added value to your life and enable more conscious saving with a purpose, the Reserve Fund and the personal investment fund.

Reserve Fund

The Reserve Fund is the most important part of your savings that you will have. The fund enables you to handle different crisis that appear in your life without causing financial stress. Maybe you get unemployed and it takes a few months to get a new job or maybe your car broke unexpectedly and expensive repairs are required. If you already have saved up money in your Reserve Fund you will be able to pay these expenses without any worries and move on with your life as usual.  

Personal Investment Fund

This fund is more about giving you a richer life, it is about investing into yourself. In life different opportunities might come along, sometimes when we are not expecting it and if it requires a bigger amount of money we might have to pass on an amazing experience. As they say, we only live once, and we don’t want to miss out on life because we couldn’t afford it. The money can be used for studying abroad, travel or learn something new for example. Basically, the purpose of the fund is anything that adds value in your life. To ensure the money is spent in the right way you can set up guidelines for yourself of when the money can be used.


We have now given our money a purpose, part of it to give financial security and the other part to add value in life. The next question is, how much do we need? Starting with the reserve fund you can calculate the amount you should have in order to handle a crisis based on the expenses of being unemployed as this is more likely to be an expense over longer term compared to a one time expense. Calculate your monthly expenses times the expected number of months of unemployment in worst case and then add a bit as a buffer. The Personal Investment Fund can be endless, the more money you have the more you’re able to do when opportunity strikes.

When you start saving for these funds the Reserve Fund has first priority and if your starting amount is relatively low on our account you should start with allocating at least 80% of your monthly savings to reserves and 20% to personal investments. As your reserves grow and approach the ideal amount you can gradually adjust the division to 50/50 and once you reach the top amount I would still recommend to have at least 10% for the reserves and 90% for the personal investments.


The whole concept of the personal funds is to save in advance. This means that instead of saving specifically for a trip you want to go on you already have the money go. When some money has been invested in yourself you will then refill to prepare for the next opportunity that can appear at anytime. In other words, when the opportunity appear you don’t have to start saving for it because you have already done that, and once you have paid for that opportunity you refill the fund for a future, yet unknown opportunity that might appear. You are always one step ahead in life. If you are starting from scratch with your savings it might take some time to reach that stage, but hang in there! You might miss out on some opportunities along the way to build up your savings but with a bit of discipline and determination you’ll soon be fully prepared to face life with your best!

There are different ways you can track these funds, you could either just open up two saving accounts on your bank account and each month transfer the money or you can track them using a tool like excel or why not the old fashioned pen and paper.

These are just two basic funds and you can of course create as many funds as you see relevant in your life. If you love travelling make your own travel fund where you put away money each month, or if you are really into the latest technology make a tech fund. However, everyone should have at least the Reserve Fund and highly recommended to have the Personal Investment Fund as well. It’s all up to you but let’s give those savings a purpose to make sure that we are investing in what matters in our lives.

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