Sinking Funds!

Happy new week friends!

I hope so far your December is treating you well! It’s always an exciting time of year, isn’t it? This time of year is also when people start thinking about sinking funds and preparing a little more in advance for the upcoming holiday season to avoid any budget fall outs or credit card debt accumulation. So, i thought it was the perfect time to discuss sinking funds and what funds we have in place!

What is a sinking fund?

From the Dave Ramsey site:

“….With a sinking fund, you save up a small amount each month for a certain block of time before you spend. To determine how much you save, take the total amount to be spent and divide it by the number of months or weeks you have left until you need to make the purchase.”

My definition is much the same. We have identified larger purchases (some one time, some reoccurring) that will happen within the next year (ending 2019). I then add up the amount of money we need to have saved to ensure all sinking funds are filled, and then divide that by the number of months we have to meet our goal. This gives me an amount that I allocate in our monthly budget. As soon as the 1st of the month hits, I immediately transfer that money into our savings account to cover the sinking fund savings.

How we use them:

We have one high interest saving account through Ally financial that we use for sinking funds. In addition to this account, in our budgeting google sheet, I have a separate tab for sinking funds to track the amount in each one. I thought of opening one savings account for each however for us (and the amount of sinking funds and planning we were likely to have) it didn’t make a huge amount of sense for us. Keeping one account with all the money in it and then using Google sheets to break it down into separate sinking fund categories works for us.

Our sinking fund categories

Note: to keep as much privacy as possible for some of the sinking fund’s I’m not going to give specifics, nor will I share the amount we save in each.

  • Seasonal Item

  • Mazda (repairs and licensing)

  • Amelia’s birthday

  • Family Visit

  • Family Visit

  • Window and gutter cleaning (2019)

  • Husband birthday

  • My birthday

  • Christmas (2019)

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Windfall sinking funds

We also have “windfall” sinking fund categories which is fairly new to us! These are sinking funds we would like to fill, but are not as urgent as the primary ones. We throw money into these funds once the primary ones have been topped up, or when we have a sum of money coming in that has been earmarked for this purchase (commissions etc.)

Bellow is a snapshot of my spreadsheet to show how I organize everything!

Sinking fund spreadsheet

Do you have sinking funds? Let me know how many you have on social media or in the comments! If you would like any additional information, shoot me a message and lets talk about it!



Sinking funds!