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Sinking Funds Detail Sheet
As I’m progressing through my budget journey to get out of debt, I’m learning more and more about budgeting, living frugal, and knowing where my money goes. But I’ve also discovered that there are things I can do that help me keep track of things. I’m definitely a Happy Planner person and creating templates and lists help me stay organized. The added bonus is that it gives me a feeling of control. I think part of my frustration in this journey has been the feeling that my debt and finances were controlling me, not that I was in control.
I created this Sinking Funds Detail sheet in order to have an idea of things that I had or already needed. I thought it would also be a great place to track important dates (personal or professional) since one of my sinking funds categories is for gifts. I think this system (which will be moved to each month as needed in my Happy Planner/Erin Condren DIY budget planner) will also help me budget one of my cash envelope categories more efficiently.
Savings vs. Sinking funds
If you’re new to a debt free journey, sinking funds might be a brand new term for you. It certainly was for me. I think it originated with the Dave Ramsey system although from what I’ve seen, there are versions of it in various debt free programs. Simply put, a sinking fund is a savings for a predetermined upcoming expense (as opposed to an emergency fund that is set up to cover unexpected expenses but that is a topic for another blog).
A savings account give you the power to store away money in an account that hopefully earns some interest. The way that I understand a savings account is that it just a pool of money that will stay, earn interest, and grow. It isn’t earmarked for any upcoming expenses and isn’t part of your monthly or annual budget.
Sinking funds give you the power to set aside money for an anticipated expense that’s going to happen in the future and not necessarily a budget item for the current month. A sinking fund can be a line item in your monthly budget or can be funded as funds are available. I think some of the confusion I had with sinking funds is that I don’t have a lot of money to set aside for this. But ultimately, even if I don’t have my entire Christmas fund fully realized by the end of the year, I’ll have some money to defray some of that cost. Basically, you want to be able to help yourself avoid putting more debt on your credit cards.
Possible Sinking funds categories:
- Car maintenance
- Car registration
- Medical expenses (co-pays/prescription)
- School clothes
- Next year’s tuition
- Household expenses
- Amazon Prime annual charge
- Gifts (Christmas, birthday)
Targeted Savings Categories
It seems simple but having sinking funds can be a very powerful tool in your budget arsenal. If you know that Amazon Prime will be due at the end of the year (we’re currently in March) and is $110, you can divide that by the number of months, paychecks, etc. that you have until you hit that deadline.
$110 / 9 months before the charge is due = $12.22
Therefore, if you set aside $12 for the next 9 months, you’d have $108 saved for the Amazon charge when it comes due! Clearly it isn’t the full amount, but it’s most of it and not $110 charge that you have to come up with out of no where. As mentioned previously, if you can anticipate and save now for an expense that will happen in the future, you lessen the chances that you’ll need to put the expense on a credit card.
You can print as many of these sinking fund detail sheets as you need. Although no expert (and I would definitely recommend testing this on your own), I’ve found that if I scale the print job to 85%, the resulting print out fits a classic happy planner (I have the punch). If I scale it down to 70-75%, it fits my mini. Printing it as is fits the big Happy Planner or a standard binder. However, your printer might be different so definitely check it out.