Starting An Opportunity Fund

Over the last couple of years I’ve become a big fan of setting up separate savings accounts, or sub-accounts, for saving towards a specific goal. As a visual person, it helps me to see a goal description and a balance next to it to show how close (or how far) I am to reaching that particular savings goal.

We currently have a number of sinking funds established in an online savings account for things like Christmas shopping, vacations and insurance premiums. We also continue to save towards a fully-funded emergency fund of six months of expenses. However, I feel compelled to save towards a new goal.

Opportunity Fund

Ever had the chance to take a last-minute trip you wanted to take, but didn’t have the money for it? Maybe it was to attend a conference on a subject you are interested in, or to visit a place you have wanted to visit since childhood. With an opportunity fund you would be able to answer when opportunity knocks.

I am reluctant to use our savings for any reason other than what the money is intended to cover. For instance, I don’t dip into our emergency fund if I find a great deal on a new laptop, and I don’t pull money out of the Christmas Savings account to buy the kids a bike in June. For the same reason, I personally find it hard to take advantage of opportunities outside of the monthly budget, and outside of our targeted savings goals. Here are a few examples of occasions to use an opportunity fund:

  • Last-minute travel deals
  • Clearance prices on household supplies to stockpile
  • Pay cash for real estate (this is more of a “someday” goal)
  • Giving. How many times have you wanted to give money to a neighbor or loved one, but didn’t have any to spare?

Why Not Use a Credit Card?

Many people simply carry a credit card for covering life’s opportunities, which borders on impulsive spending, and we all know impulsive and credit cards don’t mix. Until I’ve reached debt freedom, I’ve sworn off credit card use. For now, I find it too tempting to swipe a credit card and pay it off. I still need the transactional pain of paying cash or watching it immediately leave my checking account through a debit card.

So, I think of an opportunity fund as sort of my own personal line of credit, except I don’t have to adhere to credit card issuers’ ridiculous rules and be subjected to their frequent rule changes. It is empowering to seize the moment, pay cash, and not have a debt following me around long after.

Where to Save For Opportunities

My wife and I have decided to park our Opportunity Fund in one of the top online banks at ING Direct. The money accumulates at a slightly higher rate of interest than at a traditional savings account, and I’m a big fan of their online interface and transfer options. If something comes up, we can transfer money to our checking account in only a couple days, or simply write a check from our local emergency fund and replenish it from the Opportunity Fund. Either way, it’s nice to have some cash on hand specifically for an opportunity- most of the time it doesn’t knock twice!


  1. It’s a new side fund for me, I guess I consider it a vacation fund in my book but that insists something that requires more planning. I understand what you are saying but if you want that impulse opportunity and only have some of the money, I don’t think paying with CC or pulling elsewhere would be terrible. You have a lot of restraint not to.

  2. I personally don’t use an opportunity fund.

    I think this could work depending on the personalities of the people involved.

    Having said that, what I like about this article is that it points out how we have “off budget” items that always pop up. In other words, we have to expect the unexpected.

  3. I think you could also use your opportunity fund for the purchase of assets. For instance, if you would have had an opportunity fund set up in January, when the stock market had pretty much tanked, you could have dumped your opportunity fund into investments. This is something I really wanted to do this year, but it made more financial sense for me to focus on getting out of debt and developing a positive cash flow. Sometimes we miss out on the best opportunities for gaining wealth because we haven’t planned for them.

  4. I never thought of opportunity fund, I like the concept. I agree with Neal that it may not always work, I think unless you have very strong cashflow there really will not be a lot of cash available between all the different savings and payments. We have never used it, after all the payments and savings if anything is left in our accounts we just throw it in the miscellaneous account and use those funds for the unexpected events.

  5. I think this is a great idea! I’m not sure if you’ve ever read “The Richest Man in Babylon” but there is a chapter on luck. It is suggested that someone can “make their own luck” by being ready for opportunities when they come along.

    There are many times in my life when I have had such opportunities but didn’t have a fund for this. One example is Google Stock. I knew when it first came out for about $80 a share that it would be something to buy into and buy into big. If I had had an opportunity fund set aside I would have shoveled it all into that stock because I was already familiar with the company for years and knew they would do well. Now it’s just a distant “if only…”. In the future I’d like to turn that “if only” to “I’m glad I…”.

  6. Great idea! I have had a short-term fund for a while and have just started a lemon fund (funded by the money I didn’t spend for an extended warranty on my TV.) I intend to continue funding it with each major purchase instead of buying the extended warranties, kind of a self warranty.

  7. My husband and I do the exact same thing. I call it our own personal line of credit. Most recently, we used it to purchase a quarter of organic, grass-fed beef straight from the rancher. We used the money from this fund because the rancher only has meat available one time a year. Each month, I use a bit of our grocery budget to pay back the opportunity fund for the loan. We still get to make big purchases, but without having a creditor on our backs. I love it!

  8. @Jennifer: That’s a great use of the opportunity fund – kind of what I was thinking with stockpiling items when on sale. But buying a side of beef (or more) and freezing for later use would be a great way to lower your grocery budget throughout the year.

    @All: Several of you have mentioned using an “Opportunity Fund” for making investments. We are often reminded by advisors to “keep some cash on the sidelines,” and this fund is really just an extension of that thinking in that it can be used for everyday opportunities, not just in the market.

  9. We also use ING and I love the ease of looking at where we stand at a glance. I have recently also been thinking about starting an opportunity fund, but our emergency fund isn’t fully funded yet. Do you think it is important that we have our emergency fund fully funded before we start putting money in our opportunity fund?

  10. @Lauren: Yes, I like the idea of fully funding an emergency fund before starting to save for “opportunities.” The Opportunity Fund comes at the tail-end of a financial turnaround, baby steps plan, etc. At least, it should in my opinion.

  11. FD, I love the idea of an opportunity fund. There are always things coming up that are big enough to make it difficult to squeeze them into my monthly budget but really great deals. It seems a shame to pass on some of the travel deals, in particular.

    I’ve actually heard of this type of fund before, except the person who told me about it called it an “Oh vey!” fund. As in, “oh vey!, my dentist says i need a crown.” It was to cover mini-emergencies.

    The difference is that your opportunity fund is meant to cover positive expenditures. I may well start an opportunity fund myself!

  12. Kinda sounds like that Sunny Day Fund you wrote about a long time back, which is what I call mine. It’s basically the same thing — a tiny savings account separate from everything else that has no definite purpose… Just to exist until it’s needed.

    My only issue is figuring out when a good time to use it is. I can’t tell what good opportunities are (sales on designer duds with big discounts?) or when I should just wait. (In case something better comes along.)

    Usually, I use the fund to stash away money for something fun. I just used it in the past couple of weeks to hold my money until I was able to get a new tattoo, then made the transfer. Makes sure I don’t spend any of it and whatever’s left goes back in the fund.

  13. Something happens psychologically when you separate your money and assign a purpose for it. Some people argue that all money is equal, but I have noticed that if your money doesn’t have a purpose, it tends to disappear.

  14. I agree…there is definitely something tangible about assigning a purpose to money. Similar to the Napolean Hill concept in “Think and Grow Rich” I would certainly recommend this from an investing standpoint too…not just as a counsumer.