Have you heard of sinking funds before? It’s a new term for me, but we’ve been doing sinking funds the last while without realizing it. Today on the blog, I’m sharing 2 simple tips to start sinking funds for beginners.
What’s a sinking fund?
“A sinking fund is a sum of money that you set aside (usually by saving a bit each month) that’s completely separate from your savings account.” – From thebalance.com
What are some benefits of sinking funds if you’re a beginner to any kind of budgeting?
- They prevent you from dipping into your savings / debt reduction funds.
- They can help you to become more intentional with your spending..
See more benefits of sinking funds here.
Right now, we have a sinking fund for our basement reno. We’re not going into debt to complete our reno as we set a specific goal and have been setting aside money monthly (and in turn being better stewards of our finances to actually save for it faster).
2 simple tips to start sinking funds for beginners
- Start with one category for setting aside money in a sinking fund. It could get really overwhelming really quickly if you create many at one time.
- Start small. If you have debt, for instance, you may need to make your sinking funds a lot smaller in the meantime. But, you can create sinking funds for predictable things like Christmas sinking funds or birthday sinking funds.
And you can read other simple tips to start sinking funds for beginners here on this blog.
Want to start applying this simple sinking funds method to start saving money for specific things? I created a freebie printable for you to do just that: a sinking fund goals tracker. You can download that here.
I’d also suggest reading my friend Shelly’s blog here with some more great tips: “5 No Spend Month Tips and Tricks”
Other blogs of mine you may like:
- Simple Budgeting Tips for People Who Don’t Like Budgeting
- How to Do a Zero Spend Month that Works for You
- Five Tips to Have a Successful Zero Spend Month
- How to Create Minimal Wardrobes for Kids on a Budget
Here’s to more mindful spending!
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