Sinking funds: Saving money long-term and short-term

I got a great question from Instagram and I wanted to answer it. It's all about where to put sinking funds.

Snail Mail:
Lydia Senn
P.O Box 572
Creola, AL 36525

This video may contain links to affiliate programs. If you click on the link and make a purchase I will get a small percentage of that sale at NO extra charge to you. However, you are under no obligation to buy anything I ever mention in a video.

Snail Mail:
Lydia Senn
P.O Box 572
Creola, AL 36525

This video may contain links to affiliate programs. If you click on the link and make a purchase I will get a small percentage of that sale at NO extra charge to you. However, you are under no obligation to buy anything I ever mention in a video.

[rapidfallsfarm]

We have our checking account linked to 4 savings accounts so I just log into my bank app and transfer the money. It helps me to visually see the accounts and say ok, we have xxx amount of dollars in this account and xxx in that account. Having sinking funds has been life changing already and we only started in January of 2017. It's amazing to log in and see what we already have saved for Christmas for example!!!

[couponcarol]

You can get spares parts like the side mirror, from the junkyard. A few years ago i rubbed the aluminum wheel on a curb... a friend of ours, told us about the junkyard... OMG, 1 10th the cost.

[Sandyyyyyyyyyy]

I use SmartyPig, an online bank, to hold my different savings. When I first started using sinking funds I had like 12 and never had enough money in any one of them to use correctly. I've since adjusted to a similar approach to Lydia's in that we have a two sinking funds: home improvements and other. The "other" fund is anything from saving for a vacation to saving for a car. We do keep the funds separate because I tend to get really excited when I see a lot of money and I find lots of things to do with it lol

[kimbers]

I like the idea of deciding what ur gonna save for then move to the next item. I think that will work better for me than the multiple accts.

[kathalinehansen]

I LOVE your new color and design scheme.

[BlackPearlMinistries]

We operate the same way. We have two savings accounts joined up with our Checking. One is LONG TERM (the 3-6 months expenses). This rarely gets touched. We add to it, but rarely take away from it unless of course we need it to live on.

We have a 'short term' savings which is a combo of all our funds we would need for (car insurance, home repairs, doctors, etc). When the bill comes up we can pay for it.

We tried the multiple accounts, but were always short here or there in that particular category.

[citygurl]

I use this method as well. Makes the most sense to me

[irhonda]

You are so relatable! Love your videos! And your sense of humor. :-)

[sandyl.]

That was an EXCELLENT question and VERY VERY helpful for me 👍🏽

[livewelljess]

We pretty much operate the same way. More than one savings account becomes too much for my brain.

[shannonwhite]

We have 3 sinking funds and our emergency fund. Which is only $500. I know some would shudder but every time we got it to $1000 we would have an "emergency" and it would be gone. Since we dropped it, we've not touched it. Our budget is set up that if we have something come up unexpectedly we cash flow it and adjust. To be honest when we were trying to hold $1000 and had to use I would always feel defeated having to go back to baby step one. Now, it's just a bump in the road and we move on. We are in the tail end of our baby step 2a(credit card debt). As for the sinking funds, they are Christmas, general savings for upcoming needs, and vacations. I could live with out the vacation fund but this was a compromise with the hubby to keep the peace!😉

[jessy]

We have 6 months emergency funds and we maintain that amount in the bank always . Then on top of it we maintain 5000$ for all expenses like school education expenses, kids activities, clothes, car maintenances and insurances and also emergencies . That works for us .. We had garage door repair of 250$ and that amount came out of that account. If we have anything major expenditure like buying a laptop etc then we set aside money for planned thing before we save the remaining money . But there r not too many things like that. Just one or two. Beyond this point we just pay remaining amount for house mortgage . We could finish our house mortgage in next 5 years if we continue like this . Having too many sinking funds is confusing and hard to handle.

[freedominabudget]

My favorite sinking fund is my 6 month car insurance bill. Saving and paying 6 months at a time saves my about $450-$500 a year!

[mamas]

Good advice like always. I find if you don't have money for it you have to re-evaluate your definition of an emergency. For instance our dryer went out and we didn't have the cash for it so I had to start drying my clothes outside on a clothesline. Do what you gotta do

[CoolCraftyCreations]

I plan on only having an emergency fund for just that emergencies. The sinking fund to me would be things like (purchase a new laptop, or get the old one fixed) or purchase a vacuum cleaner

[Shesirie]

Im having a difficulty with finding extra money to put in a sinking fund for like those twice a year experiences or random emergencies. Im currently building my in case work loss emergency fund which is auto from my job. Its being funded on turtle speed right now. But 2018 taxes has emergency fund written all over it.

[bonaventura]

It can be more expensive to keep sinking funds in individual accounts. Banks have fees for accounts and a large portion of how they make their money is by preying off the poor with fees such as overdraft fees and service fees. I am referring to service fees where you have to keep so much money in an account or they will charge money on the account. In my opinion, it is better to delineate sinking fund money into on paper/excel sheet rather than actually having separate accounts. I think this also builds good habits in that it teaches you not to associate the amount of money in your checking account with the amount of money you have to spend. Also, when one's budget is incredibly tight,  keeping it all together might be the ONLY option to avoid service fees.

[momofmomof]

For me, I have to keep it simple. All of those sinking funds would drive me crazy. I have my emergency fund which is available for all emergencies. I have my checking for daily expenses, and my major savings managed by my financial adviser. For me, simplicity is key.

[kandykissesco]

I wish I was able to get my husband to save he's a spender it's very stressful specially now that we are trying to save to buy a house 😭😖😔

[DeedraBoodram]

What about Christmas or car repairs?? Do you budget for it or do you pull it out of your savings?