Years ago, we were hit with the once a year letter that our Home Owner Association dues were due. You would think that after the first year we would have learned, but between nursing littles and homeschooling tons of kids, saving for home owner association fees were not on my radar. Back then, my husband was traveling all over the state, gone 4 to 5 days a week, and somehow our HOA fees always got “lost in translation.” You know those bills or things that come every year that hit you when you least expect them ONLY you know they are coming because hello? They come every year! Like Christmas, car taxes, new tires, HOA’s, birthdays, and so much more!

So after being smacked in the face by life and bills in the fog of having 3 babies 3 and under and being overwhelmed so much of the time, we finally learned to plan better. We learned about sinking funds. A sinking fund is a strategic way to save a little bit every month to pay for large expenses that are planned.

In the throes of life and work and kids, a lot of times, we can fail to plan, and that was us! We were so busy with everything else, finances were the last thing we wanted to talk about at the end of the night. BUT because of that, we found ourselves scrambling and not living our best financial life. So how in the world will sinking funds change your finances in 2020?

By saving for categories like Christmas, HOA’s, tires, sports, Valentine’s Day, birthdays, you will not go into debt! So instead of putting those expenses on a credit card, if you save a little each month, you will be prepared for the things that are bound to come up!
By creating a sinking fund, it gives you peace of mind that you will have the money when you need it. I remember tons of times thinking, “Oh crap, what are we going to do about this unplanned for expense. So by creating a sinking fund, you will have peace of mind!
By creating a sinking fund, you create financial freedom to do the things you want and need to do without carrying the weight of debt. This month we are creating a vacation sinking fund, where we will put money away each paycheck to go toward Spring Break Vacation. Spring Break comes up every year, but this is the first year our kids have been in school (well half of them), so we want to take them on a short and fun Spring Break trip!

So some of you may be wondering well how do I create a sinking fund? So if you want to save for Christmas, you’re going to take how much you plan to save, divide that by the months you will be saving! So if you want to save $1000 for 10 months, then you’ll save $100 each month or $50 each paycheck! You can put the money in an envelope or put it in a separate account! And do not touch it! So each month you do your budget, you will decide how much you want to set aside for sinking funds. It will be based on how much you have after you have paid all of your bills and expenses, so it may just $10 a month to start but starting small still is still taking steps in the right direction of your financial goals.

Create sinking funds for birthdays, Christmas, tires, etc just to be prepared for what is coming! By creating a sinking fund you are creating financial habits to transform your finances not only in 2020 but beyond. How many of you want to create a financial legacy for your children and family? God has more for us in 2020 when it comes to our finances friend, and guess what! It starts today!

Until next time friend,

Shelly