Sinking Funds: Making Experiences Work Within Your Expenses
When it comes to budgeting, most folks either avoid it altogether or treat it like a punishment. But what if your budget could actually reflect what matters to you—and help you fund it?
I talk about this all the time with my clients and community: your budget should work for your life, not just restrict it. That’s where sinking funds come in. They’re not just envelopes or sub-savings accounts—they’re how you budget yourself into your budget.
Let’s walk through how to use sinking funds to plan for real life: birthdays, Beyoncé tickets, fall getaways, oil changes, and everything in between. Whether you're saving up for something fun or functional, here’s how to break it all the way down in plain terms.
What Is A Sinking Fund?
A sinking fund is a way to set aside money over time for a planned expense. Think of it like this: instead of scrambling when your car insurance premium is due, you already have a mini stash saved for it—because you’ve been setting aside money for the past few months.
It’s called a "sinking" fund because the amount you owe is sinking into the background. You're not going into debt, overdrafting, or panicking.
But more than just bills, sinking funds help you stay ready for what you want, too.
Examples Of Sinking Funds You Might Need:
Travel (girls’ trip, family visits, staycations)
Vehicle or home maintenance
Holiday gifts or celebrations
School expenses or certifications
Concerts, festivals, or pop-ups
Taxes or annual expenses
Medical expenses like dental cleanings or eye exams (outside of your HSA/FSA)
Back-to-school shopping
Self-care or therapy sessions
Why Sinking Funds Matter For Your Budget
Sinking funds give your money a job before the deadline hits. It’s about moving from reactive to proactive. You don’t have to wonder if you’ll be able to afford something—you’ve already budgeted for it in pieces.
The biggest shift my clients see when they start using sinking funds is peace of mind. They're no longer surprised by the costs that used to sneak up on them. Instead, they’re ready, even excited, because they know where their money is going.
Step 1: Know What You're Really Saving For
This is where we get honest about what your next few months (or years) look like. Sit down and map out what’s coming up—both the must-do things and the want-to-do ones.
Ask yourself:
What do I want to experience?
What expenses do I know are coming?
What do I not want to swipe my credit card for again?
Is this for fun or to build funds towards a particular goal (down payment, a course, etc)
Write it down. This isn’t just a wishlist—it’s your life plan in dollars.
Step 2: Audit Your Wallet To Find The Money
Before you dive into setting a number and a timeline for your goal, you need to know where your money is currently going. Here’s a link to fully audit your wallet, but I want you to see how you could take this theory and see how it could tactfully align you with your money goals. Yes, you can make more money, but how you handle your means now is how you will handle your more. This isn’t about shame — it’s about clarity. Go line by line through your bank and credit card statements. What’s actually being spent? What subscriptions are on autopilot that you’re not even using?
Then look at where you can find or redirect money to go toward your sinking fund goal:
Negotiate your bills: Call your phone, internet, or insurance providers. Ask for discounts, downgrade unused services, or use a script to ask, “Is there a current promotion I qualify for?” [ Scripts here]
Pause or reduce spending categories: Could you temporarily lower your dining out or delivery budget? Could grocery planning save you $20/week?
Round up your purchases or use cashback: Apps or debit cards that round up and save the difference add up quickly when you let it stack.
Reallocate found money: Get a tax refund, bonus, or random check? Apply a percentage toward your goal before spending the rest.
This is how you start budgeting yourself into your budget. You make room for what matters by being intentional about what stays, what gets trimmed, and where every dollar goes.
Step 3: Reverse Engineer Your Timeline + Amount
Now that you know what you want to save for and how much wiggle room you have — it’s time to work it backward. Let’s say your goal is to take a $1,200 trip in 6 months. Divide the goal by the time you have:
$1,200 ÷ 6 months = $200/month
Or about $50/week.
Now ask yourself: Does this number realistically fit into your current budget after you did your audit?
If yes — automate it and move forward.
If not — revisit your goal amount, timeline, or consider pairing this goal with additional income streams. The point isn’t to give up. It’s to make the math and the lifestyle match up.
Step 4: Budget Yourself Into Your Budget
When it comes to finding the balance within our budget and being, you have to look for ways to carve your life into the freedom you want. You probably have a budget somewhere—or at least the intention to make one—but the missing piece is often you. Your real life, your joy, your needs. It’s time to budget yourself into your own budget.
Pull that list of sinking fund goals out and start prioritizing.
Beyoncé tickets? Top tier.
New tires before winter? Crucial.
Girls’ trip? Let’s plan for it.
Treat Yo Self fund? Necessary.
This is where intentional money moves happen.
Let’s say you negotiated your phone bill and freed up $60. That doesn’t just disappear. It gets reassigned:
$20 → Beyoncé Fund or Super Bowl Fund
$20 → Car Maintenance
$20 → Treat Yo Self
Now your budget is speaking back to you:
“I got you.” You’re not depriving yourself. You’re giving your money a role to play in your life.
Step 5: Choose Where Your Sinking Funds Will Live
Not all money has to sit in one place. Mind you, separating your sinking funds can help you actually use them properly when the time comes.
Here are a few options:
High-Yield Savings Account (HYSA): Great for goals 3+ months out. You’ll earn more interest while the money sits. Here’s a breakdown on HYSA options and how to choose one. Ally Bank’s Savings Buckets feature is one of my favorites because you can name and separate each goal inside one account. Marcus, Capital One 360, and American Express are great options, too.
Separate checking account: Ideal for near-term expenses (1–2 months away) that you need easier access to without accidentally spending them.
Cash envelopes or prepaid cards: Not for everyone, but they work if you're a very tactile spender.
Choose the method that helps you stick to your plan, not stress yourself out.
Step 6: Make Funding It Automatic (Or At Least Easy)
Automation is your best friend here. Even if it’s $10 every Friday, set it and forget it.
You can:
Set recurring transfers to your HYSA or other savings accounts
Use companies like Ally, SoFi, or Capital One that allow for “bucket” or goal-based saving
Manually transfer on payday (just be consistent)
You can also use my Budget Done For You service if you need help building this into your existing cash flow. I help folks just like you create a system that feels like them. Book a session here.
Step 7: Track Progress + Adjust When Needed
Your priorities will shift—and that’s normal.
Check in monthly to ask:
Is this goal still important to me?
Can I add a little more this month?
Do I need to pause or reduce a fund temporarily?
Think of it like leveling up. You’re not just saving, you’re actively budgeting for a life—and that means things shift. You don’t cancel the plan, you just adjust the steps.
Make Your Budget Feel Like You
Budgeting isn’t just math. It’s your life, in numbers. If you’re only budgeting for bills and forgetting everything else—you’re setting yourself up to feel behind, or worse, resentful of your own finances.
Sinking funds are how you create space in your budget. Space for experiences. For joy. For real life.
And if you need a financial strategy that feels customized to your priorities, tap into my Ask Me Anything or Budget Done For You sessions. Let’s build a system that speaks to your life.
Ask Me Anything Session – Get your money questions answered
Budget Done For You – Build a realistic plan that works
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Compound Interest/Final Word
Your money should reflect your values, your dreams, and your real life. With sinking funds, you’re not just budgeting — you’re building a financial life that feels good. That covers both the Beyoncé tickets and the oil changes.
Start small. Stay consistent. And let your money know what matters to you.
Watch this YouTube to get more context beyond this blog post!
