Budgeting and getting out of debt can be tough work, but once you’re on your way it feels good to make progress. You may be pondering how to budget and save money at the same time. One of the smartest ways to stay out of debt and stick to your budget, is to develop sinking funds accounts. You may be wondering – what are sinking funds? Sinking funds are savings accounts that you set up for a specific purpose. They really help you learn how to budget and stick to one successfully, without any unexpected bills that can ruin your monthly budget.
Today I am going to be sharing with you the top 7 sinking fund savings goals that you should set up to save money and help you stay out of debt once and for all.
I am going to be using my favorite savings account from CIT Bank, to show you how I use it to save money and set up my sinking fund goals.
1.) Short term Emergency Goal– This account is for when your car breaks down, or your furnace needs repair. It is only to be used for emergencies. This is not grocery money or Christmas money. I recommend starting with $500 – $1000 in this goal.
2.) Holiday Savings Goal – Figure out how much money you need for the holidays next year, then make sure you deposit that amount in your holiday savings account. I prefer to do a direct deposit every month to make this very easy.
3.) Vacation Goal– Want to go on a vacation this year? Set a goal for the amount of money you want to spend and divide that amount by 12. Then set up a direct deposit for that amount per month. Or you can also put lump sums in when you get bonuses at work or a tax return.
4.) Healthcare Cost Goal– This goal is separate from an actual HSA account and should be used for medical expenses. This can be for items not covered under your health insurance or for co-pays. A lot of companies do not provide HSA accounts, so you can start a medical-specific savings goal of $200 or so to get you through the year.
5.) Quarterly Bills Goal –For example water bills, garbage collection bills, or any other bill that not paid monthly. These bills always seem to creep up on us and cause us to go over budget on the months they are due.
6.) Savings for larger goals –Saving up for your next car or house purchase? You should make this goal specific to the item you are saving for and give it an amount.
7.) Bonus account for those who are self-employed. Put aside your monthly tax deductions in a separate savings account so that when you pay your yearly (or quarterly) taxes, you have the money already set aside.
With SmartyPig you can open up an account, then set up goals within your account. You will need to link a current bank account to your SmartyPig account so that you can transfer funds into your sinking funds. When you deposit money, you assign it to a goal within your SmartyPig account.
I just set up a brand new account, so let me show you what goals I have set up
This is a general overview of my goals with the target amount I want saved. You can also see a breakdown of each individual goal.
As you can see I have all of my goals in my account with a date that I want to accomplish each goal by. I can easily set up automatic transfers into these goals from my bank account or manually do it. This makes saving SO easy!
SmartyPig is actually a partner of Sallie Mae, which I know many of you are familiar with. SmartyPig is a totally free and an FDIC insured savings account that makes saving easy and rewarding. Think of it like a digital piggy bank.
These 7 savings goals will literally change how you organize your finances. You will feel SO much better about your future moving forward and it’s cool to see your goals being accomplished!
So head on over and open up a free SmartyPig account, set up your goals and get started on your journey of saving!
Please note that I was compensated by Sallie Mae for providing this content. All opinions expressed herein are my own.
SmartyPig Accounts are offered through Sallie Mae Bank, Member FDIC.