The end of the year is generally the time when most folks revisit their budgets and set new goals for the coming year. That makes it the perfect time to talk about one of my favorite budget items.
Ever lose a concert ticket which is nonrefundable? The self-recrimination is immediate: You idiot! Get better at organizing.
Or perhaps you’ve just gotten sick before a trip. Delta is going to charge a $250 change fee, so instead of cancelling you just crawl your way through what was supposed to be a fun cross-country trip.
And even more common: you buy a gorgeous ____ and see it at half the price 3 months later. D’oh!! What a purchase fail.
We’ve all been here before. Something happens, something to make us feel completely awful about ourselves and our ability to manager our beautiful, streamlined financial system. And while there are some circumstances in which the event truly can highlight room for improvement (maybe you should put the concert tickets in a safe place), often all these events boil down to is the following:
- You are not a robot
- The world is not always fair
Given that we know these two things are true and not going to change anytime in the near future, we should be able to limit our unhappiness when these normal life events occur.
Enter the Life Friction Fund.
The Life Friction Fund
You know at the start of a year that some dastardly things are going to happen to you. You don’t know exactly what form they will take, but they are out there, creeping about in the dark. What’s a smart (distinctly un-dastardly) person to do?
Stash a little cash into a life friction fund. Set aside a couple hundred dollars at the start of the year, and when one of these monsters crops up, you can point self-righteously at them.
“Aha!” You can say, and thwap them in the face with your stacks of bills. “I planned for you!”
There is something incredibly refreshing about setting funds aside like this. It gives you a sense of control over what seems like such an uncontrollable event. What makes you feel so awful at the time is how helpless you are, and how much it is “wasting” of your money.
If you account for this ahead of time, that feeling goes away. Now it’s all just going according to plan. If you are going to not be a robot, and the world is going to continue this whole not being fair thing, this will happen to you whether you stick your head in the sand about it or not. Better to acknowledge it and plan ahead.
The Holidays, Life Friction, and Friends
The life friction fund has many other useful applications. One specific application I use it for, particularly around the holidays, is for interactions with friends.
Now, most of my friends are good people, and hopefully yours are, too. But sometimes your friendship collides head on with a money issue. Splitting the bill can be tricky, for example. There’s that uncomfortable moment when the total comes up short and everyone has to pony up a bit more. Damn, you think, who is the cheapskate? You’re still thinking about it when you head home. How could someone cheap out like that? How rude.
Not only have you paid for their action with your money, but now you are paying for it with your time as well! Don’t let it eat you up inside. Plan ahead!
This does not mean you need to create a fund to let your friends take advantage of you. If you have a regular offender, you probably need to talk to this person about it or avoid them for instances when they are not paying their fair share. If there’s a major discrepancy, you are well within your rights to call it out politely.
But in group dynamics, this is bound to come up, and it is just the normal friction cost of being social. You can, of course avoid it by being a total hermit.
Or you can take the bad with the good and plan ahead.
The best part?
If I don’t end up having problems here, I can always spend it at the end of the year on a bond-building friend event or tuck it away into savings.
The benefits to baking it into your budget, however, are endless. Buying rounds of drinks that aren’t reciprocated immediately, that awkward moment deciding whether to split the check equally with a couple that ordered one drink more than you, all that can be easily tidied up by your life friction fund.
Frankly, I can’t think of a better way to spend my money than in the company of good, honest friends. And I’d like to design my life to absorb that kind of negativity and leave me mentally ready for other challenges in the world.
Most folks build their budget assuming perfect behavior in all aspects of their lives. Leaving no room for mistakes – or rather, just regular life – is a recipe for disappointment and falling short of your financial goals.
This year, build a life friction fund into your budget. A few hundred dollars for the year will go a long way.