How To Set Up Sinking Funds
Hey guys, this is my blog where we talk about planning life and managing money.
Today’s post is about my sinking funds. If you’ve been around this blog for a while, then you know that I have consistently struggled with saving for sinking funds, feeling like I didn’t have enough money to set aside. But I think I’ve finally settled into a system that really works for my family, and I wanted to share it with you today.
Setting Up My Baseline
I pulled out a sheet of paper from the Tool notebook collection (it fits perfectly in the budget planner I created). If you have my budget planner, you can definitely use this paper to add extra sheets.
So first things first ,pull the sheet out to work on.
Here’s what I realized: establishing a baseline for my sinking funds is the best way to stay on top of them, instead of trying to save for every little thing from each paycheck.
My Baseline Amount: $5,000
Before starting any additional sinking funds, I saved $5,000 into my sinking fund/emergency fund account. This covers:
- Car repairs – usually around $700 each time something comes up.
- Car insurance – $2,300 every six months for both cars (Progressive).
- Home repairs – usually $500–$1,000, so I set aside $1,000.
- Medical/Other – doctor visits or emergencies. Sometimes this fund is used to fly home to see my parents if needed.
That totals $5,000. This money sits in the emergency fund account and does not move. It’s there as a safety net.
My Other Sinking Funds
Once the $5,000 baseline was set aside, I started saving for other sinking funds like trips, birthdays, and conferences.
I plan in 3-month increments so I don’t overwhelm myself with a whole year at once.
Here’s what’s coming up:
1. Anniversary Trip to Chicago
- Flights: $415 (already booked)
- Hotel: $500
- Food: $400 ($100/day)
- Shopping: $250
- Total: $1,565
2. Daughter’s 6th Birthday (May 6)
- Chuck E. Cheese Party: $125
- Decorations: $60
- Gifts: $100
- Food & Games: $65
- Total: $350
3. BYOB Conference (May 22–24 in Miami)
- Conference Tickets: $60 (caught a sale!)
- Flights (2 tickets): $986
- Hotel: $400
- Food: $200
- Total: $1,646
Total Savings Needed
- Anniversary: $1,565
- Birthday: $350
- Conference: $1,646
- Total = $3,561
Over the next 14 weeks, that means I need to save $255 per paycheck.
Of course, this requires sacrifices — cutting down on shopping and restaurant spending. But I believe it will be worth it.
My Rule
If anything comes up that touches the baseline categories (car, home, medical/other), I stop saving for trips/conferences and replenish the $5,000 first. That’s my safety net.
Because we are on variable income, sometimes we’re able to add extra income and save faster. The quicker we reach the savings goal, the less we sacrifice.
In Conclusion
This system of:
- Building a $5,000 baseline
- Saving in 3-month increments
- Setting a fixed amount per paycheck
…has helped me stay consistent with sinking funds, even on a variable income.
I hope this helps you if you’re struggling with sinking funds like I used to.
Until next time, keep organizing your life so that you can achieve your dreams.
