Heat granulated sugar and water in a medium saucepan over medium heat, stirring constantly with a spatula or wooden spoon.
When it begins to simmer, turn the heat up to high and boil until it turns amber in color, 4-5 minutes. Stir continuously and watch closely to avoid burning.
Remove from heat and slowly add cream, using caution as it may bubble up. Don't be concerned if the caramel sauce lumps or "seizes" at this point. Just keep stirring it until it smooths out.
Stir in butter and vanilla.
Allow to cool slightly before using.
*Substitute brown sugar to make butterscotch sauce
Hack: Refrigerate leftovers in a tightly sealed container. The sauce will thicken when cold, so warm before using.
Hack: Sauce can be refrigerated for up to a month or frozen for up to 3 months.
