Some of you may already have this type of fund. You’ve just labeled it different. If you don’t want to be caught off guard, you should definitely think about starting a transportation fund. Having it ensures that your emergency fund is used for real emergencies.
What is a Transportation Fund?
A transportation fund is not a travel or vacation fund. This fund should be used to support your day to day travel that way when there’s a bill, you’re covered. I would always wait until the last minute to come up with the money to pay for things, even when I knew it was coming. If I had an unexpected emergency, then I’d have to dip into my savings (not good).
5 Reasons Why You Need A Transportation Fund
Here are a few reasons why you might need to have a transportation fund:
- Yearly car fees. Inspection fees, registration and taxes, AAA membership fees; they’re all coming. Why wait until the month that it’s due. The money will be ready and waiting for you if you put a little away each month.
- Insurance deductibles. The insurance deductible for your car, boat or motorcycle. Having a higher deductible often means cheaper rates but suddenly coming up with $500 or $250 might be a problem for many. No one plans or expects to have an accident. I know I don’t. It’s still a good idea to have that money ready when you need it.
- Plane tickets. You have to take an unexpected trip out of town. Yes, you could use your emergency fund but why touch it if you don’t have to. Use this fund instead for your plane or train tickets.
- Car repairs. Need new brakes or new tires. You might be planning to have some other work done that’s not covered by the warranty. It’s a smart move to put money aside. Buying a set of new tires can be a breeze when you already have the money in an account.
- Truck or can rental. Need to rent a U-haul for moving into your next place or for bringing home that big Antiques Roadshow find from the estate sale. (You don’t know, it might happen ?)
4 Ways to Create Your Transportation Fund
4 easy methods to help ensure that you’ll be prepared:
- A separate checking account
- A separate online savings account
- A money market account.
- The envelope system. (Putting cash aside each month)
- Bonus: Go old school like grandma and use a canning jar or a money sock. Truth be told, any method that you choose and stick with is a good method.
Deposit your money into an online saving account that doesn’t come with a card. This will be the best route to go for starting your transportation fund. That way, you won’t be tempted to use it for that pop up sale at Macy’s. Bankrate has great info on the best online banks and interest rates. While your money is building up in this account, you should be gathering interest.
We know you can’t plan for everything but putting money into a transportation fund every month will help to insure that you’re prepared. If you only used part of the money you have saved then good news, you’ve got a head start on next year. Maybe you prefer to move part of the money (not the deductible, let it stay) into your vacation fund or a Roth IRA.
I hope that you’ll consider starting a transportation fund, because being prepared is definitely spending time wisely.
