Are you sinking your funds? 

We talk about budgets a lot around here. We believe that having a budget for your monthly expenses is terrific! But, don’t forget you have some expenses that are not monthly and some that are definitely not regular. Some bills will only come to your mailbox once a year. Bills like the car tag/tax, and your homeowner association dues, your insurance, and that annual termite bond. You also know that sometimes you will have a large purchase that you want to make. Sometimes those purchases are planned and sometimes they are not. For those times that it is not planned, and Murphy comes knocking, you have an emergency fund. But what about the times that, let’s say, you want to replace your living room couch?  

For the times when you know an expense will come or you are planning to upgrade your furniture, you can and should utilize sinking funds. These are for strategically saving for upcoming events. If you know that you want that new couch in the spring and that you want to spend about $1500, then get busy over the next 7 months strategically saving $215 each month.  

If your tax bill comes due every April, take that estimated bill and spread that over 12 months. This would mean saving about $30 each month for a tax bill of $360, to enable you pay that bill comfortably when it comes due. This is how you pay cash for things and keep from going into debt. This is living intentionally and being what Dave Ramsey calls “weird”.  

A special savings account used to hold your sinking funds is usually your best bet for making sure that when these planned expenses come due… you won’t be caught you off guard or forced to live on bread and water in December because you forgot to save up for Christmas gifts! 

If you are interested, click here and you can find an example of a sinking funds tracker that you can purchase and print. Of course, if you are super talented, you can design your own. Either way, a tracker will help you know what all the money in your sinking funds saving account is allotted for and, at the same time, what it is not.