The 6 'Sinking Funds' That Make Me Ready For Any Expense

Through weekly video essays, "Making It Work" showcases how *real* people have upgraded their personal or financial lives in some meaningful way. Making your life work for you doesn't mean getting rich just for the sake of it. It means making the most of what you have to build a life you love, both in your present and in your future. And while managing money is a crucial life skill for everyone, there's no one "right way" to go about it — you have to figure out what works best for *you,* full stop.

Video by Grace Lee

Video narration by Kelly Dwyer

Based on an essay by Anna Craven

The Financial Diet site:

[ThePalFishCoach]

I was able to pay $520 cash for my tires last year thanks to a 2-year sinking fund! Also, the dealer tried to convince me the job was worth $900+ because he’d added on extras like insurance for each individual tire, yada yada, despite my having pre-ordered the service and having the receipt in hand. I let him him and haw a while, then just slapped the money on the table and said “Well, this is all I have to pay you!” Immediately the price went down to what I’d ordered. I never felt more like a boss! :P

[dc-]

I couldn’t figure out why I was stuck on Dave Ramsey’s Baby Step #2 and it was because his methodology would NOT allow me to put money away for non-emergency emergencies (my $1000 for Baby Step #1 was not to touch under any circumstance other than for dire events). His method focuses entirely on ONLY paying off debt with as much money as you can muster, but I’d always end up with surprise payments to a plethora of things that would put be back into debt. I immediately re-evaluated and set up sinking funds for this year and I’m already feeling more at peace financially. I might not be paying my debt off as fast as before, but I won’t be adding to it unintentionally from a surprise car maintenance or a home repair—I’ve got a nice money cushion I’m still contributing to!

[davidblunk]

This truly is the the definition of financial peace! Never having to worry about yearly expenses again. No more surprises of car tags and taxes, Christmas, random gifts throughout the year, Amazon Prime membership, organizational dues. The possibilities are endless.

[Simply.Mariela]

This perfectly explains what a sinking fund is. Thought it was more complicated than that and turns out I’m already doing it 😅

[story.stoner]

Oh shit yeah, sinking funds have absolutely changed my life. I probably have too many, but then again, I don't worry about money anymore, so maybe it's the perfect amount. BTW, I only started in June 2019:


1. My Career (currently saving for admission to legal profession in QLD, which is a lot of expensive paper);
2. My Birthday Fund;
2. Easter Long Weekend;
3. Side-Hustle Fund (currently saving for a new computer);
5. Emergency Fund
6. Dental Fund;
7. Health Care (I have this just in case. We have universal healthcare in Australia);
8. Life Savings;
9. Long Service Leave (spending money for the 6 months off work I planning in 2024);
10. Bills (car, electricity ect);
11. Travel (currently saving for a 3 week trip to the UK in September);
12. Wardrobe Fund (currently saving for Tony Bianco boots and a Drizabone rain jacket for my Scotland trip)
13. Christmas Fund (NYE inclusive).

What does everyone else have?

[ahoardersheart]

I LOVE my sinking funds!!! I should be debt free by March 2020 because I budget, have sinking funds and stopped using my charge cards! Love these videos to keep me motivated!!

[SuzyYen]

Sinking funds worked wonders for me in 2019. With the $$ I set aside monthly using the envelope system, it has enabled me to go on a long awaited trip to Taiwan, 3 concerts to my favourite KPop group and 3 family members birthdays plus another short holiday at the end of the year. I’m going to continue using this sinking fund system in 2020. It really changed the way on how I handled my finances. Thanks to this amazing channel ~ my favourite channel ever!! ♥️♥️♥️♥️♥️♥️

[jacoblindsey]

My wife and I already do something similar in YNAB! We have a "yearly expenses" section for things like Prime and AAA. I like this idea of breaking down our categories more of general "clothing" like socks and new underwear, into a sinking fund for higher priced clothes while still keeping something in for smaller necessity clothing items.

Thank you!

[helend]

I put away $75 each month for 7 years to pay for my families first trip to Disneyworld.

[allisonbuettner]

Literally just transferred my money into my sinking funds this morning! Love having vids like this to make me feel validated :)
My sinking funds are:
-pet care
-Christmas
-taxes (from freelance income)
-auto maintenance
-home maintenance
-clothing
-cosmetics

[musicismylove]

This is similar to what I've heard on the "One Big Happy Life" youtube channel when they plan their budget for an entire year. Knowing that $480 insurance bill will hit in August, just as an example, they put on their monthly budget "$40 each month for insurance" and that covers it annually. I use Ally Bank and they just implemented a "bucket" feature in savings accounts and it's for this exact purpose. So useful!!

[Natta]

I already do this. Glad I'm so organised! 'Travel fund', 'Emergency fund' which is basically car maintenance and a 'fun fund' for guilt-free gigs, events, meals, parties, new clothes etc! I feel like being financially organised is the only sensible thing I've done in life.

[rama]

I use capital one for my sinking funds, I have about 9 accounts: Car Maintenance ( recommend this to everyone, prices are high especially if you don't DIY), Pets, vacation, Holiday, Birthday (save for other people), Medical (saving up for invisalign), broadway/fun (i love going but they can be expensive), new car, new phone, and crossrope.

[Riverinthesky-im]

I don't like having too many accounts so I save everything to one savings account and treat everything over what I save for emergencies my all-purpose sinking fund

[tanyalua]

I started sinking funds this year! I have one for
tuition (I take 2 courses per semester),
gifts (birthdays and Christmas),
travel (to go home a few times per year),
Paris (my 30th birthday dream trip) and “Luxuries” (for bigger purchases of high end items like a new parka or new phone etc).

[edwinfndz]

I find it so uncomfortable that Americans have to save money for medical care. One of the richest countries in the world and no universal medical care. Gross.

[npruitt]

1. Pets
2. Salon
3. Vacation
4. Car
5. Holidays
6. Clothing

[TheEntrepreneurChannel]

I have 3 sinking funds. It’s fun to forget about them for months and then look where they are at! 😍💵💵🔥

[thatjillgirl]

Didn't know this had a name. I've been doing this for years. I use Mint to budget, and in the budget categories of each month, I include yearly expenses. You can set it to say that you will spend x amount once a year (or more often as applicable). Then it divides that into how much you need to set aside each month and just makes it a part of your monthly budget. When the time of the year comes when I need to spend out of that category, and the amount is already accounted for. I do this for gift spending, yes, but also with dentist appointments, my Amazon Prime account, my car tag renewal, oil changes and other car maintenance, etc. Anything that I know will come up at least once a year but doesn't come up every month. It really does provide peace of mind.

[taysuh]

Whether you have one savings account or multiple doesn’t matter. What actually matters is that you plan/budget more than one month at a time. I am all about budgeting for a year in advance for all the predictable expenses including setting some money aside above my basic emergency fund for likely expenses, such as vet bills, replacing aging appliances, etc.