Take Control of Your Finances in 3 Days {Day 2}

Before diving into Day 2, check out Day 1.

Today, we’re going to talk about sinking funds and savings account management.

Sinking funds honestly revolutionized how I did my budget and managed our money. So what is a sinking fund?

A sinking fund is essentially a mini-savings account that is intended for a specific purpose. A sinking fund can be set up for anything from Christmas gifts to car insurance to birthday presents to vacations.

The great thing about sinking funds, especially at this uncertain time, is that you can plan out what you’re going to use them for, and then wait until the world starts back up again before you start contributing. If you’re on a tight budget right now, sinking funds can be put on the back burner, but if you can manage, you can definitely start now (or when you do your next budget). 

The other great thing about a sinking fund (and I don’t recommend this when things are normal), is that the money is still yours until you spend it. So, for instance, we’re running a tight budget at the moment, but I still put money into our bill sinking funds. In the event that things would get really tight, and we need more money, all of our sinking funds are sitting in our savings account and could be used if we really needed them. Otherwise, they’ll just sit there until bill time rolls around.

You can read posts about sinking funds at The Simple Girl’s Guide or click on any of the following posts:

We primarily use sinking funds for the bills that we pay every 6 months (car insurance, life insurance, property taxes, and home insurance) and yearly expenses (medical deductible, propane, Christmas). But they can be used for nearly any upcoming expense that won’t fit into a regular monthly budget.

Here are the steps to setting up sinking funds:

  1. Decide what your sinking fund categories will be. Remember that these can be any short term savings goals. If you want to schedule a spa day in March, figure out how much you’ll need to save each month to reach your goal. Christmas is coming in (x) months. I could keep going, but I’ll let you think for a little bit.
  2. List all of your sinking fund categories on the Sinking Fund Planner and the amount that you’ll need.
  3. Then write the due date and the number of months until the due date.
  4. Divide the total dollar amount needed by the number of months to figure out how much you’ll need to save each month.


Now, what I do each month is move the total amount that we’re putting in sinking funds into our savings account and then use my Savings Account Management Form to track how much is in each fund. Detailed instructions on how to use the form are in this post → Sinking Funds and Savings Account Management.

That’s it for today. I’ll see you back here tomorrow, and you’ll set up your budget to really take control of your money and tell it where to go!

I’d love to hear how you’re doing (financially or otherwise)! Feel free to shoot me an email at thesimplegirlsguide@gmail.com or DM me @thesimplegirlsguide on Instagram!

2 thoughts on “Take Control of Your Finances in 3 Days {Day 2}

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