Setting up a sinking fund is an easy way to afford anything you want. Use it to pay for Christmas, vacations, and more. Get started with this guide!

Afford Anything You Want with a Sinking Fund

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Have you ever come up short when making a large purchase?

Maybe it was a nice vacation. Maybe it was a new TV. Maybe it was when you were buying Christmas gifts.

Go ahead, raise your hand if this has happened to you. Don’t be shy. We’ve all been there.

If you’re like most of us, though, you probably didn’t forgo what you wanted, did you? Instead, you kicked the can down the road and plopped that big ‘ole purchase on a credit card.

Of course, the next time something came up, you were probably a little short then too. Again, you put the money on a card, and – before you knew it – you were more worried about paying off your cards than you were about saving money.

It happens.

But, all that can stop today. (And yes, I’m serious.)

Afford Anything You Want (For Reals)

Here’s a little trick to help you break that boom and bust cycle. Seriously, this is going to help you save money so you can buy almost anything you want! With a simple shift in strategy, you’ll be able to:

  • Save money for vacation
  • Save money for holiday gifts
  • Save money for a new car
  • Save money for emergencies
  • …and more

You’ll also earn quick wins, so you’re bound to stay motivated and keep moving in the right direction.

Even better, you’ll never have to put this stuff on a credit card or go into debt for it EVER again…and it takes almost ZERO effort on your part.

No more worrying. No more scraping by. Simply pay with the cash you’ve saved and move on with your life.

How would that feel? Pretty AMAZING, right?!?

How to Create a Sinking Fund

This simple trick is based on something called a “sinking fund.” In reality, though, you’re not sinking anything – you’re building…and fast! Here’s how it works:

  1. Choose a specific item to save for – like a vacation, holiday gifts, or an emergency fund.
  2. Open a new savings account to keep this money separate from your other funds (FYI, online banks are perfect for this).
  3. Give your fund a name like “Greg’s Awesome Vacation Fund,” “My Emergency Fund,” “Christmas Gift Fund,” etc.
  4. Determine how much money you need and how much time you have to save.
  5. Create an automatic transfer (or direct deposit) to move money into your new savings fund each month.
  6. Set up as many new funds as you need and repeat the process!

Here’s an example: Let’s say you want to take a Caribbean vacation, and you’ve got exactly 12 months until you have to book it. After doing some research, you determine you’ll need $2,400 to pay for the entire thing.

So, you open an online savings account, name it “vacation fund,” and set up an auto transfer in the amount of $200 per month. In 12 months, BOOOM, you’ll have exactly $2,400 saved for vacation by barely lifting a finger!

How awesome is that?

Our Favorite Savings Account – Start building your new fund by using our favorite savings account – the CIT Bank Savings Builder! You’ll earn 0.40% APY when you make a deposit of just $100 a month. Learn more here.

Here’s Why This Works…

Here’s why the sinking funds trick works so well: It’s automatic. Once the sinking fund is set up, it takes ZERO effort to set the money aside. The automation does everything for you!

And, because it’s automatic, you won’t miss the money. Just like having your retirement contribution deducted from your paycheck, it’s like the money was never there to begin with. It’s saved before you get a chance to spend it!

If you’re struggling to save, a sinking fund could be a total game changer for you. I mean, imagine having money just sitting in your bank account, ready to pay for whatever you want, whenever you want it! It’s life-changing, right?

Where to Create Your New Fund

Again, online savings accounts are great for this. First, they keep your new fund separate from your other money. This means it’s less likely you’ll accidentally spend it on other things (like groceries, gas, entertainment, etc.).

Second, it’s a lot of fun – and very motivational – to watch it grow! Finally, online banks typically provide much higher interest rates than accounts at traditional brick and mortar banks.

Although any bank works, we personally use the new CIT Bank Savings Builder account. This account currently offers a rate that’s considerably higher than interest rates at some other big-name competitors. Simply make a deposit of $100 a month (or more), and you’re golden. 

You can read our complete review by clicking on the link above or open a new account and start saving here.

Sinking Funds: Final Thoughts

We all know that saving money can be difficult. To succeed, it often comes down to proper planning.

Setting up a sinking fund is an easy way to afford anything you want. Use it to pay for Christmas, vacations, and more. Get started with this guide!

By using this sinking funds trick, you’ll be able to save for anything you want AND pay for it in cash. Just automate the process, and the decision to save is made for you.

Why not give it a try? It just might change your life!

Open Your Savings Builder Account – Open a new Savings Builder account at CIT Bank and earn more! Get started here.

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8 Comments

  1. Loved this read! A sinking fund is such a smart idea, great tips to save that are easy to do, nothing better!

    1. It’s definitely a great savings tactic that anybody can benefit from using!

  2. Been doing this for years. It works great. We also level out many of our expenses this way. For example we contribute an equal amount all year long to funds for the insurance payment, gas bill, Christmas gifts, etc. All of these are variable in terms of when they cause the greatest impact, but by spreading the expected costs evenly over twelve months, we’re generally fully funded and not caught by surprise when a bigger bill hits.

    1. Yep, I love this technique. It’s super simple and very effective for anybody, even seasoned savers.

  3. Great post Greg, I use a sinking fund for the express purpose of paying taxes. Not a very sexy thing to save for, but when a put a couple hundred bucks away each month, it feels like I’m having to pay Uncle Sam a little less every year. It works great, I recommend it for whatever you want to save up for!

  4. Ishita Dubey says:

    OMG! I had no clue about this. Seems effective. I will try out and let you know. I’m always stuck in an “I can’t afford that” situation. With this trick, hopefully I will be able to travel more without being broke.

  5. Great, Loved it I will give it a try. thanks.

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