The 6 "Sinking Funds" That Make Me Ready For Any Expense
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- Опубліковано 21 лип 2024
- In this episode, we explore the concept of "sinking funds," which can be an extremely helpful way to save more money for short-term goals and more efficiently stay on top of recurring expenses. Check out more everyday savings tips here: • 3 "Growing Up Poor" Mo...
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
/ whatssogreataboutthat
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Video narration by Kelly Dwyer
Based on an essay by Anna Craven
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In this week's episode of "Making it Work" one woman gives us the scoop of a life-changing expense helping tool ! Want more content like this ? Check out this video here : ua-cam.com/video/5XechJYH-RQ/v-deo.html
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
Yeah, tires for a standard vehicle should never be $900. F that dude, and awesome move you made!
Sophia Rodriguez hehe thank you! It was fun to watch him haggle down to insuring two tires, then just one (which, wouldn’t that mess up the balance to have one amazing tire and three bums? Haha) And then none! :)
Nice!!
Even $520 seems pricy for tires. I guess it will depend on your location and what kind of car you have, but if it's a standard midsize car, perhaps shop around. I typically spend under $300 for great tires that last me 2 years, no problem.
sarahraegraham Fair point! It took me about three months to figure out which tires I wanted. Saving over time did let me “splurge” a bit and get a more durable set for our six months of snow.
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!
Exactly! Personal finance is just that...personal. Dave Ramsey’s advice is a good starting point but it’s best to tweak it as you see fit. What you’re doing is obviously working for you.
I’ve just recently started doing the zero based budget & using cash envelopes. I’m already seeing results and I wish I would’ve started sooner 😁
YNAB aka You Need A Budget let’s you set up sinking funds - if you’re looking for a software system
Dave requires a budget, but he's not setting it up for you. It's up to you to include sinking funds in the budget if you want them. Obviously you'd have to budget for car repairs and he never says don't get your car repaired. He's not telling you not to have sinking funds.
I put away $75 each month for 7 years to pay for my families first trip to Disneyworld.
But what are you going to do in Disneyland?
That’s awesome
I live 45 minutes from Disney world and never went.
This perfectly explains what a sinking fund is. Thought it was more complicated than that and turns out I’m already doing it 😅
Lol same. I’ve always been confused when people tried to explain it. It just sounded like a different name for savings account. So I guess I wasn’t too far off. It’s just a short term savings account with a specific purpose.
@@leilanidru7506 yup! haha
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!!
Only two months left! Congratulations! That is a great accomplishment. I become consumer debt free March 2019 and you are going to love it. Enjoy the ride because it is about to get awesome!
Wonderful! Congratulations!!!!!
Hey, I watch your channel! ❤️
I wish i could like this comment 5 times!! Wahooo!!
What an amazing achievement! Good for you (:
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.
I did this method for the first time in 2019 and Christmas was totally different. 2020 was the first year I didn't get a giant Christmas bill in the mail in January and man was that awesome. I also checked out your channel David and you have some good content!
@@michaelanthony6613 Thanks for the channel endorsement! :)
@@michaelanthony6613 Congratulations on the success. Keep it up!
Literally none of those are surprises lol
@@AllTheArtsy right lol.
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.
Disgusting
Repellent
As someone who has a serious medical condition I will work really hard to make sure I have good health care and savings as I have been hospitalized multiple times.
I am also on a medication that many gov. run health programs do not offer because of the cost. However there are many people who have very low healthcare expenses and they should not have to pay for my health, that is my responsibility.
And I am fine with medication being expensive because drug companies spend so much in R&D that they have no guarantee will pay off.
Here is a true scenario
I am 1 of 4 kids
We came from the same parents so we should have the same chances of health issues
I have a serious autoimmune condition that requires me to go to specialists every 6 months have bloodwork every 6months and be on a very expensive medication through self injection every 2 weeks. I also have bad vision so I have to pay for glasses and regular eye exams to have my prescriptions updated
My 3 siblings go to the doctors once a year and have perfect vision so they don’t have the medical expenses I do
I hold a full coverage medical plan that has a low max out of pocket and a really good drug coverage. I also pay a lot for that.
My 3 siblings have catastrophic coverage. They pay a few dollars each month and if something serious happens they are covered but they don’t need as much coverage as me.
I pay more because I need more
Would I like to spend the money I do for healthcare on something fun like a vacation yea but I’m an adult and know I have to put my health first. My siblings should not have to pay for my medical care.
If you actually read this whole thing thank you and one final note Universal healthcare is not free in countries that have it their taxes are much higher especially their regressive taxes like sales tax that hit the lowest earners the hardest.
It is the rich in those countries that are the best off there because they can travel to the US for medical care. I work in hospitality and we have an entire sector of medical tourism where people from Canada, Europe, the UK and the Middle East come to the US to have medical procedures done. The low income residents in those countries are put on a waiting list as they can not fly to a different country for medical procedures.
Olivia I cant agree with you more!! Very Well said!
I find it abhorrent and I'm an American.
1. Pets
2. Salon
3. Vacation
4. Car
5. Holidays
6. Clothing
Natalie Pruitt thanks for this. I think sinking funds are specific to each person though, so this list is just giving viewers ideas.
Thank you, I wanted to screenshot that frame but didn't know how
@@marissal9707 yeah like I don't have a car, so I would have a fund for something else, or just add more to one of the other funds
My hero!
I was looking for that, thank you! ❤
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
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?
I have 3 sinking funds. It’s fun to forget about them for months and then look where they are at! 😍💵💵🔥
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!! ♥️♥️♥️♥️♥️♥️
3 Kpop concerts?! Cool. I have an annual sinking fund for EXO concert ☺ There are rumours that SM Town will come to Malaysia in 2020, so I'm saving up for that too because going to one is in my bucket list ☺
Suzieana Uda Nagu wowww!!! You are a fellow EXO-L!!!! Hi so nice to meet a fellow Eries here!!!!! I went to 3 EXO concerts in 2019.Singapore, Taipei and Malaysia. Ya ya, I heard about the SM Town thingy in Malaysia oso..maybe I will go...
Marie G Hi there, for Taipei I saved about $1500.. Tat includes my fligh tickets, air bnb, vouchers on Klook because I can save some money buying on Klook coz it’s cheaper there. I didn’t spend much on food there only because I cook in my air bnb apartment as much as I can and I only allowed myself to buy some souvenirs for keepsake and to give to friends n family. I didn’t buy any clothes or shoes coz I was on a NO BUY for those 2 items...
I swear every kpop fan needs a sinking fund! Ateez and bts were both covered by my sinking funds 😂
Wow, I'd like to learn more..
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!
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.
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
Chase let's you go online and set multiple goals in one savings account. Each deposit can be put toward whichever goals you want. That way you set up separate sinking funds in one savings account.
B Gaudin Good tip. Thanks!!
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!!
I was super excited when Ally started their bucket method. The emails they sent had at the edge of my seat anticipating it's arrival lol
I love Ally's bucket system. I would never want 5+ savings accounts to monitor.
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.
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).
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.
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.
I go to a lot of musicals, but never really put money away for it specifically. Now that theater is pretty much closed without site of when it will return, I have plenty of time to create a sinking fund for it!
What is crossrope?
In addition to long-term and short-term savings accounts, I use 2 checking accounts. I used to have an issue reconciling whether I was budgeting weekly or monthly, since we have lots of expenses for both. Every week, I have an amount automatically transferred from my primary checking to my secondary (monthly bills) checking account. This evens out the balance in the primary account and allows me to think more at a weekly level for near-term budgeting, since large monthly expenses/transfers come out of the secondary checking account, which has been receiving weekly transfers from primary checking. As a bonus, every 3 months, there is a 5th week in the month, so I have a nice surplus I can move to investments.
I live sinking funds as they ALLOW me to have a VERY strict budget and i freelance so it also allows me pots i can fill up with irregular income. If later in tge year i have too much in sink funds we have the exciting situation of choosing another category/usually holiday to save for. It rewards our goid behaviour as once we have covered our payments for the year we can either prefill 2021 or splurge the rest! Love the video
I like to do named savings accounts for different goals: I have one called emergency fund, one for longer term goals (like moving out or replacing a laptop), and one for shorter term goals (Christmas/holiday spending, or a new pair of shoes.) It works well for me :)
I love doing this! I personally have my all my sinking funds kept in one investment account (I use the Acorns app). Then, I also keep a small spreadsheet in my phone and monthly update how much is allocated to each category. I find that I like this because I generally will get better returns on the idle money because it’s now one large sum kept together, rather than small amounts in many accounts. Also, if I end up with a big pet bill or car bill that is bigger than it’s allotted amount, then I can take out all I need and deal with the adjustments to the other accounts later. I love this method!
I'm starting sinking Funds for my university fees, the very expensive 3D TV I'd like to own in 3 years, my Holiday gifts and vacations this month. I'm super excited to get some order into my savings. I've previously tried to store them all in one bank account, but I don't have the self-control to not get over budget in any specific category if all the money for the others is still available^^
I clicked on this video to learn something new, as i always do with TFD vids, bt just realized I practice this method without knowing it was a thing. I have pre saved money for almost anything!!
I save up to 5 months of a big expense I run on my CC or my school fees prior to making the purchase and keep saving on that time frame to have another bunch of money when the pre paid fees are done. I find this really helpfull to keep my income - savings on a healthy ratio. What I sometimes struggle is with impulse shopping but im working on it.
I've been using Qapital to do this and I LOVE IT. I was super worried about expenses for traveling to my cousin's wedding this year, but now I have a sinking fund that I'm on track to reach my goal for a whole month early. Total game changer. 🙌🏻
Of the very few financial tips my mom gave, this was the best one. Accrue money for future expenses, especially the regular and known amounts, and for the realistically expected, unknown, ones.
I discovered this “sinking fund” concept last week AND HERE YOU GO damn
I dont know what the universe is trying to prove to me but the videos about this sinking fund is flooding my feed. And nope I was not searching for it here in youtube so the alogrithm shouldnt even be able to track that.... Oooh
Thank you I also missed binging your videos 😘
Great explanatory video on sinking funds! This is a good fund to build with or after an emergency fund!
I’ve never considered sinking funds (besides my HSA) but I love the concept. I’ll have to incorporate it into my budget!
My goal this year was to start a bunch of sinking funds for exactly some of the things listed here! Last year I budgeted month to month for the first time, and now I am trying a yearly budget. It's motivating to see other people doing it too.
Woah!!!!!!! Thank you. I had no idea where to go after I made my emergency fund. This is awesome.
I have one bank account for my sinking funds. I use it for anything which is a payment over time e.g. 12 week Spanish course, insurance subscription. To help me track my needs I label relevant calendar events as 'Bill: £200 Car Insurance' that way I can search my digital calendar and very quickly total up my costs for the year. I round up and divide my 12. Once a bill is paid I move the event into the next year etc. Works wonders!!
I’ve been doing this for a long time and it takes the pressure off. I started with a Christmas account and now have sinking funds for holidays, school fees, health, pets, mine and hubbys personal spending, bills and cars. I have direct debits set up to all accounts so it happens in the background. I only wish I had started doing it sooner than I did.
In 2019, I saved $100 per pay check and put a $100 bill in a hidden can in my closet. Any time I had a windfall of at least $100, I converted into a single bill and into the can. Wow! it was great!! This year $150 -- let's see...
If you want a good video on sinking funds, the budget mom has awesome videos on it.
Ive been using sinking funds for years for bills and its always been super helpful. If your unsure how much to put away, get a bank statement from the year before, work out your utilities and car etc, then use that as a base line for the next year.
Great episode - it's very convincing in its specificity. Even though I use both a yearly and a monthly budget, the unexpected expenses are very tricky to handle, mentally. This frames a nice mental trick for dealing with them.
Good advice. I've wanted to create sinking funds for awhile. Especially since I had an emergency vet visit last month and took everything out of my checking. Now my checking account looks sad.
What if I'm sinking in debt? 😅
Same. Sinking debt. 😂
This sounds like Rule #2 if you use or follow YNAB. Great video!
Big advocate of sinking funds! It was life-changing to be able to pay for 6 months of my car insurance without it affecting my paycheck AT ALL
Excellent video and great advice. Just a large semi-annual car insurance premium can challenge that month's budgeting. The challenge goes away with a sinking fund.
I need to start my sinking fund, I know I will be moving later this year so I'll start putting money aside for that and I also want to go on a holiday! This was a helpful explanation start early putting away smaller amounts
I have 13 sinking funds. Sinking funds are amazing - no more worrying about these expenses.
I just started doing this with my paycheck, I set up set dollar amounts to be deposited into various accounts automatically with my direct deposit.
It hurts to not see the larger amount going to my regular savings but I just remind myself of where it divided up into and keep on saving.
This is really useful. Was looking for this exact topic and glad it got covered. Thank you!
Makes me think I should switch my bank, pretty sure they charge extra for every new account. But then again, they offer other services I appreciate, I can probably work out a spreadsheet to simulate different sinking funds.
Holy shoot, I had no clue maintaining a car was THAT expensive. Glad I don't have one lol.
I'd probably set up a very broad one for 'things breaking'. Be that a PC that'll need complete replacement, or a washing machine that just needs a repair. I guess those could technically count as emergency, but I can survive without both of those, so it's not quite as bad as say a medical emergency.
I have one account for savings and a spreadsheet manages the split for the sinking funds. And my emergency fund is separate. I have loads funds and it makes like so easy. Never worry about money now.
Yeah, you don't have to keep it all in different accounts if you don't want to. I don't even move mine into savings (though I do put some into savings each month just to have as generic emergency savings). I just let it build in my checking account and then I track it in my budget on Mint by letting my spending (or lack thereof) in the specified category roll over each month.
Thanks. I was wondering how to save this kind of money. I finally understood.
Still one of my favourite Making It Work videos - so helpful, and really clearly explained. Since watching this video a few years ago, I did exactly as advised and now am never stressed about things like holiday purchases or clothing splurges, as the money is already there. Thank you so much for this wonderful piece of financial advice!
We love to hear that!!
Nice video ^^ I do think six funds can be excessive, setting aside money in a savings account outside of the e-fund is a good idea.
I’ve been doin this and I never realized what it was called. I’ve been saving up for the PS5 and new games
Oooh, good one! I usually just use my tax return on new game consoles but I'm lessening my refund to in turn have more to spend on my paychecks. But...that in turn allows for me to control what I set aside to save instead of Uncle Sam claiming it all :)
So I have a question. For each of the accounts that you created from the credit union, are you getting charged for each of the accounts? I was looking to make another savings account with my bank but my advisor told me that I would charged extra for opening another account. Are the credit unions different? Thank you! 😊💙
I love sinking funds! I didn't know it had a name until today, but have been using them for a couple of years. They are also great for big-ticket items that you know you will have to replace every couple of years, I have one for my phone and one for my laptop.
Can't wait to get started !!
I have Tech, Vacation, and Career accounts that are similar to this. Tech I think is an especially useful fund because tech is often expensive and needs to be replaced in an infrequent but consistent manner. I will have to add a car fund though. That’s a good idea.
My career fund isn’t actually a true sinking fund. I put all the money from my occasional side hustle into my career fund so I can pay for things to kickstart my career. Giving a purpose for side hustle income is good idea I think I took from this channel a while ago.
Just started doing this! Really helpful.
Take a shot every time she says “sinking fund.” 😂
No thanks.. I choose life.. lol
As a citizen and resident of a country with free nationalised healthcare, the idea of sinking/emergency funds for healthcare always takes me by surprise when mentioned. What a horrifying and terrifying thing to have to potentially spend on. Best wishes to anyone having to save for/spend on healthcare out there
This video explains very good the definition of a sinking fund! Good Job!
Don't forget to save money for retirement. If you want a little savings, then save a little. If you want a large savings, then save a lot. I put my retirement savings in index mutual funds and that's been the single best decision of my life.
I live in Canada and our major banks change $5 per transaction on a savings account, so... Credit union is an option for sure, but going to a large bank is a bad idea.
I had no idea it was called this either. I have ones set up as separate savings accounts for an iPad I want to buy and several trips but now I am thinking I should do this for medical expenses or something else too... Thanks TFD!
For Christmas presents I always buy for people months leading up to Christmas so that way it is lower stress financially and mentally for December. People also say they want things throughout the year but can never think of them when it's Christmas time! I am that type lol
Haven't tried this yet but sounds like a good strategy! How do i determine how much to set aside each month for each expense? Like she set aside way more for the car expenses than other things.
Very well explained!!!!👏 now i have a very clear understanding of what this fund is.
I do this already for my Car insurance / any issues that may occur to my car :)
I love sinking funds. I have 9, which I know seems excessive for some but works perfectly for me. Popped a tire last winter and was easily able to pay for it without worrying. I even have one for my Amazon Prime yearly membership. Sure I could just budget for it every May but I like having the money already there.
We have 16 but just virtually in Excel. They are all in one bank account but organized in categories in our Excel chart.
I have 13 and every single one of them is a life saver
Great video! Already sent this video to some close friends 👌🏽🤍
I live by these now. It holds me accountable. I never have to worry about expenses I know are coming just don’t know when for most. I only count the large lump sum into my budget and than break that $ down from there.
I wish I had been doing this sooner!
very good explainer i always wanted to know what it was
I think I'm going to do this with the bills I owe for, starting with the small ones and working my way up to the large ones (medical bills). I'm looking to move out on my own so why not help my credit out first?
for these do you have to open up multiple bank accounts?
Really well done video. Thank you!
Mine are:
Annual HOA
Annual property tax
Future car
Home maintenance (new carpet, new roof, etc)
I think pet/veterinarian costs is a good idea. I'm going to add that.
I had no idea they were called sinking funds, but I already have a few. The latest one I set up is $10 a month for my birthday next year so I can have a guilt free splurge in whatever I want. I already have one for medical expenses and another for car repairs.
Do banks/credit unions (maybe the answer is different for each) care if you have like 7 savings accounts?
I’ve been doing this for 2 years and it’s so addicting!
I've been doing this for years and it got much easier when I started using YNAB to manage my money. No need for separate accounts because YNAB has you assign every dollar a job. It also calculates how much you need to save per month to meet your "sinking fund" goal.
Never in my life have I made more than 20k/year. These funds seem like an impossible ideal to me.
small starts can go a long way
Right on. In many cases this starts with making more money. I used to do sinking funds on extreme shoestring budget and was going hungry just to meet the sinking fund needs. That right there is an indicator to make more money, side hustle or second job.
At the moment I make 4800 €/year, so I have zero room for sinking funds, but it seems a great idea!
In all seriousness, you have to find a way to increase your income, cut unnecessary expenses, AND spend less. If you can manage to do all three, then I guarantee you’ll have extra money to work with.
Excellent. Thank you.
How does opening all those savings account work? Do they have to be with different banks or can I just have separate accounts created with my current bank? It'd seem like a hassle to have a separate bank account for each one of the sinking funds and be easier to just view them all within a parent acct
You can do either depending on your bank.
I have my sinking funds in seperate online accounts (only have 2) with my main bank, and my emergency fund with another bank. Its really personal and whatever works for you. Some people also use one online savings account for everything and use excel to keep them on track for how much is allocated to each category, and some people use cash envelopes.
@@jadiecakes3241 ahh okay. I'll need to poke around and see how to do that then. Thank you!
I started to do this last month because I realized that I had been playing financial defense and not thinking proactively. I created a line item in my savings account and created a separate account for pets and car, because I knew these were the most likely culprits.
If you have a high yield savings, wouldn't it better served to have one "sinking fund" account, to gain more interest? Since you'd have a larger sum overall and could tske advantage of the IR?
It really doesn't make a difference since it's the same amount of money total gaining interest
For sure, however i think its more a mental thing to see an account named "car" or "clothes" and go ok i have x amount for that category.
Its like snowball vs avalanche for debt. Its about how people see it and feel about it, not what necessarily makes mathematical sense
How did people not know about this already?
Vet bill and Taxes are my 2 sinking funds!
I use the app Digit to do this automatically.
This is a great alternative to the physical envelope and cash system. I think 6 accounts is unnecessary and could instead just be kept on a spreadsheet without needing multiple accounts.
I really don’t get what difference it makes if you keep your money in different accounts /envelopes vs. putting everything in one savings account . Use thoughtful spending and save whenever you can.
It seems excessive to have all those actual accounts. I just do it virtually with the checkbook app. So technically all my money is in one savings account, but on my app I have as many sinking funds as I want that can be easily adjusted at any time. We are teachers so every semester our budget changes. The money is still in a savings account so it is more difficult to spend and easier to save. Has worked amazingly for years!
Blackwater Elephant Is the app simply called “The Checkbook App”?
Karina Gutierrez checkbook ledger I think.
Karina Gutierrez it’s green with brown on the outside and a pen in middle
I use, or well, I am attempting to use sinking funds. But I have found myself spending "future" money that would have gone into de fund. It's a bit frustrating, but I'm trying to work things out.
Sara Angel Try an online savings account. I am an online ESL teacher. Given that that’s an independent contractor position, I must set aside my own taxes. My first year, I set aside my future tax owed in my regular savings account... but I kept dipping into it and ended up having near-nothing the following April. My second year, I opened an account with VioBank. I give it an A for its interest rate (2%) and a C for its “convenience.” Only because it takes about 10 days for the money I transfer in to be available, and 10 days for it to transfer out. Which, in my situation, is wonderful. I think twice about dipping into my funds when I know I’ll need to wait a week and a half to access it anyway. I’ll be paying my taxes this year with extra savings in tow. Check it out!
Do you have a written budget?
Use a second bank. I used to do the same thing until i segregated my money into another bank. And i leave the card for that new bank at home unless i need to pay for something from the sinking funds (which is usually once every 3 months when i pay utilities)
I do this, very helpful. But having separate accounts for each fund is not necessary. i have a secondary account where all that money goes. just have to keep track what you put in and take out by category.
This is literally how I do a lot of my budgeting! It's nice to feel validated in that.
I'm trying to get into sinking funds but I have no idea where to go... I'm thinking an online bank but whenever I even try to look at the nerdwallet articles I panic. Any suggestions?
Ally, CapitalOne360, etc. Most allow you to make multiple accounts for free, no minimum balances, around 6 monthly transaction options, High yield savings options. You can also nickname the accounts to keep them separated. I have used Ally for years and very happy with them as a company!
P.S. American Express is offering some users with a certain balance a high yield savings option. Don't stress too much about choosing one--I would only avoid ones that require a minimum balance or hit you with a fee. Look up one or two and they usually compare their savings rate to other online options.
There’s also digit which will take small amounts from your account every so often. You can set different goals (I have car, dog, credit card and rainy day). While it charges $3 a month, I find it worth it
@@lillianw4714 Yeah, this is what I was concerned with when the video said SIX different bank accounts! I wondered about minimum balances because any bank like that is an absolute no for me. Emergencies happen and sometimes I need all funds. And while I'm willing to pay a $6 monthly fee for my prepaid card as I get my paycheck faster with it, I don't want to add more monthly fees with a bank. I'm going to look at the options you suggested to help find a free option that works for me. I'm even okay without getting interest, because I have a feeling a bank account with no minimum balance, no maintenance fees and offers a decent interest rate is something way too good to be true :)
Kathy Burton Capital One 360 and Ally Bank. I have both! Love them. No fees.
Chase online, you can set up different accounts, or multiple goals in a single account.
So an Irregular/Annual expenses fund
This used to be called Christmas Club/Holiday Club account. My Mom always had one for random gifts and extras.
I've done this for years. It's so helpful! Especially if you have pets. I put $100/month for my dog's vet bills, medication, and buffer. I've added an additional fund this year for kids' irregular expenses like birthday parties, professional pictures, and school supplies/uniforms.
Honestly, I believe most Americans should probably have some type of HSA or health care sinking funds. Start small or just add money to your “rainy day” fund even if you are perfectly healthy. Health insurance won’t protect you on all fronts especially if something isn’t covered or an accident happens that requires co pays. And if you own pets definitely a fund for them as well.
Good video!