![]() Read it all if you want the details, and then tap “Make this a fund.” There’s a graphic that pops up explaining a bit more about how funds work. Right by that little piggy bank, tap “Make this a fund.” Open up your EveryDollar budget and click “Add Item” under the budget category of your choice. Here’s exactly how to create a sinking fund in my favorite budgeting app, EveryDollar: So, whether you budget with a spreadsheet, in an app, or with a pencil and paper, put your sinking fund line item in the budget! Step 4: Set up your sinking fund in the budget.Ī sinking fund will only work if it’s in the budget. That means you’ll need a line item in your budget reminding you to stash away about $330 every month until December. If you want to spend $1,000 on Christmas and it’s September, you only have about three months to save. To determine how much to save, take the total amount you want to spend and divide it by the number of months or weeks you have left until you need to make the purchase. (More on this in Step 4.) Step 3: Decide how much you need to save. EveryDollar will designate that money for you in your budget so you always know exactly how much is in that fund. If you use our free budgeting tool, EveryDollar, you don’t need a separate savings account at all. You don’t want monthly fees to chip away at your balance. If you want to open another savings account for a sinking fund, make sure the account doesn’t have a minimum balance to maintain (like a money market). Step 2: Decide where you’re going to store your sinking fund. ![]() You want to put a little bit aside over time so the holiday season doesn’t sneak up on you and make you broke. Let’s pretend you’re starting a sinking fund for Christmas. Step 1: Decide what you’re saving up for. Now that you know what sinking funds are, how they work, and why they’ll help you, here’s how to create one in four easy steps. Saving strategically means fun purchases will actually be fun, and frustrating expenses won’t be a big deal. These aren’t emergencies yet, and if you start saving up now, they never will be! If you know the house you just bought has an old roof, start saving for a new one. Prepare for those inevitable expenses. When you see those tires are wearing thin, start saving for new ones.When it comes time to spend, you can do it without worry or regret. Lose any guilt associated with large purchases. Decide up front (with your spouse, if you have one) what you’re saving for and how much money you’d like to set aside.Make room for fun by telling your money what to do, month after month. Upgrade your kitchen, take the trip of your dreams, invest in your hobbies, or give generously. ![]()
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