SINKING FUNDS | How We Save For Special Occasions 💵

Hey guys, welcome back to my channel. In today's video I'm actually going to be covering a topic that I've never talked about on my channel before and that is sinking funds. What are sinking funds and why is this something that I recommend everybody has? So sinking funds are saving for those irregular or seasonal expenses that come up every single year. For example, Christmas. We know it happens every December 25th but if we're not saving for those in advance then it can become a really big problem in our financial journey. A few of the other things that I save in my sinking funds every year are things like car registration. If you have a car then you know every year you have to renew the registration on that. So we save for that. We save for birthdays. We save for any other kind of event that we know is going to happen and that is not a typical expense in our monthly budget. So I did a poll on my Instagram and over a thousand people voted that they wanted me to do a video like this. So that's what we're here to do today. So today I'll be showing you guys my personal sinking funds and how we budget for them throughout the entire year. Before I even get started I want to talk to you guys about why I personally think sinking funds and saving for these sinking funds are the most important thing in your budget. When it came to saving money, we could save money. We always had an emergency fund but these things would come up and we would take from our emergency fund every single time. It would throw off our budget. We'd get back into using credit cards and it just didn't work out. And so when I started getting excited about saving for sinking funds and this started last year, everything kind of clicked and everything made sense and we finally stuck to a budget. So this is why I say this is almost like step one when creating your budget and helping you stick with it. That's definitely a personal preference but that's what really helped us start budgeting our money better. So that's why I wanted to do a video like this is because these helped me so much with budgeting that I'm hoping this will inspire you guys to do the same. So first of all I like to have cash envelopes for all of the things that we budget for. I just like to see the money in cash and we have it here in a safe that we have hidden in our house that has a code. So I'm not too worried about having all this amount of cash on us at once in the house but these are the envelopes I have created myself just out of craft paper that I got at Hobby Lobby. I got it at the beginning of the year. I made my own envelopes. On the backs here I have the amount written as well as when I want it funded by and if it's fully funded I will have these crossed off so I know. So we have quite a few in here. Several that we have already used for example Easter, Valentine's Day, birthdays. We've had a few of those that have already happened this year but as far as creating your yearly sinking fund tracker this is how I do it. Okay so every single thing that we have planned for the year is here on this tracker. I'm going to go through every single one of these with you guys just so you have some kind of reference if you have no idea how to start. What you want to first do is create your entire year. So for example in February we had my car registration that was $150. So I had that planned ahead. Valentine's Day I like to save $150 for the kids for their Valentines and for us to maybe go to dinner. So $150 saved for that. What you guys want to do is create your entire year. Think of every expense that happens throughout the year and then you're going to get a total. Okay so add every single number up together. You're going to get a grand total and then what I would recommend you do is divide that number by 12. That shows you how much you need to be saving every single month to fully fund your sinking funds. Now here's the thing we're already into the year it's April so you're going to need to adjust your math just a little bit but the same rule applies. So we have eight months left in the year. If you are saving for Christmas you actually want to have that funded by November. You don't want to have it funded by the end of December. That wouldn't do you any good. So if you want it funded by November you actually want to pretend we only have seven months left in the year and then from right now April to November that is the time you have to fully fund your entire sinking funds. Now if you are someone who gets a weekly paycheck what I actually did is I got my total number. Okay so this is back in January when I created my sinking funds. I got my total number and then I divided it by 12. Okay so then I knew okay this is how much money I want to be saving every single month but we get paid every week. So what we did is we took that number and then divided it by four. That gave us the amount of money we want to be saving every single week since we get paid every week. And for us that made it a lot easier to budget for. We knew with every paycheck this much money goes in to the sinking funds. This will also do something else. When you have this fully done and you divide it by 12 and if you're someone who gets paid weekly then divide it by four right. If that number is astronomical and there's no way that you could afford that then you need to adjust your sinking funds. Maybe you had a thousand dollars you wanted to save for Christmas but that is just not realistic so maybe you need to cut it down to more like 500. So this is where you can really decide okay this is what we can afford for the whole year of all of these different expenses and adjust accordingly. Now before I show you guys my personal sinking fund I want you guys to remember that every single person and every single budget is different. So what you're looking at here is going to be very different than what yours is going to look like. Christmas is definitely my biggest amount but I also want you guys to know that this has a lot to do with my business. Because I make YouTube videos a lot of this has to do with me decorating and that does cost quite a bit. So my Christmas budget I've also included decorations and those new things that I would need to be purchasing to make money on YouTube throughout the month of December. Again everybody's is going to look different and you just need to find something that's going to work for you. Okay so we are going to start at the very beginning and this is how I do my sinking funds for the whole year. You want to start with the things that will occur first. So we have February, March, April, May, June, July, August, October, and December. So these are things that I know will happen or things I know I want to save for for the year 2020. So first thing was car registration. This happened in February and I looked it up on our Utah's website so I knew exactly how much money I needed for my registration this year. So that was $150. If anytime you see these lines that means that we've already used the fund because it's already happened. So this has been fully funded it's already happened. So car registration $150. Valentine's Day obviously that happens in February. We saved $150 for that. Now one thing I want to also mention is you actually want to have these fully funded the month before they're due. So for example my car registration I made sure by January this was the first priority to have funded in the year. So in January I had this funded. If this is too confusing just write down the month that you actually want it funded. So this should say January, this should say January, my son's birthday March 2nd. I definitely want that funded in February so that I can be buying the gifts and buying the things necessary for his birthday. Now here you see $200. We have just decided as a family that $200 is what we save per person per birthday and this includes balloons, cake, party stuff, everything. Okay so $200 is what we save per person per birthday. Now our twins turned eight in April. We saved $250 per kid and we decided once they turned eight we would start $250 for each of them. So they had a total of $500. Now something that we started doing as of this year is we told the kids the budget we had for them and when it came time for them planning their birthday we told them if you want to rent you know like a bounce house, if you want to go somewhere and rent out a park or something like that, something that will cost one to two hundred dollars then that's going to come out of your birthday fund and so that really helped them decide. They originally wanted to rent out some kind of jump house that was about $200 for all their friends to come and they decided you know what we'll just do it at home and that way we can have more towards our gifts and then the same thing they wanted this elaborate cake that I would have had to pay over a hundred dollars to get someone to make and they decided you know what just make cupcakes. So that is something that we've been teaching our kids now that they've turned eight and they know what the birthday budget is and this helps them decide what they would rather have. Would they rather have more gifts or would they rather have most of their money going towards stuff at their birthday? Now this birthday did end up being a little bit different because we were in quarantine so we were just here just with ourselves. So yes it did end up being a little bit different than what we had originally planned but that's okay. We did save from last year a Disneyland trip that we were planning for the year 2020 and we decided we were actually just going to go over the kids birthday so they weren't even going to really have a birthday here. Once we told them hey we're just going to be at Disneyland we're going to plan our trip over your birthday that didn't end up working out but we still have a credit at Disneyland that we had saved for from the previous year and then we use a sinking fund to do that. Then we had Easter. We had $150 saved for that and that includes everything for Easter. Decor, baskets, everything. That's what we had budgeted. Now birthdays I have this for all year. This is for all of the different kinds of birthdays that we'll be invited to. We have $300 saved in that sinking fund so again this is not just like our immediate family this is just for really anybody. Mother's Day that'll be in May. We have $140 budgeted for Mother's Day and then Father's Day in June I have $200 budgeted and this is because every year on Father's Day my mom and all her side of the family come to our house and we have a big barbecue and we like to supply everything for that and so that can be kind of pricey but that is where most of that will go to is actually our barbecue. Then we have the 4th of July. That's $160 and this will include fireworks, the event that we go to on the 4th of July. There's like a big park that we go to and so this will allow us to ride rides and eat some food there so that's what that's for. Thomas's birthday is in July. We have $200 here. Back to school in August $500 so that's $250 per kid. Then we have our baby which is in August and I have $800. I actually don't think I will need that full amount. Right now we have all of this funded to here so we have a few hundred dollars in the baby fund and then from here down we have not saved anything yet so we're almost done with funding our sinking funds for the year. Halloween obviously that's in October. We have $300. This would include costumes, candy, maybe if I want to get some more decorations if that would fit into that budget that's what that's for. Then my birthday is in December $200 there and then Christmas I have $1,850 and I know that this amount will be quite large to some. Maybe it's way less than some of you guys spend but we do have a budget per kid that we like to spend and also we have several family members that we like to buy gifts for and then this also includes buying new decor and the different business expenses that I have in the month of December for my YouTube channel. Now when you see the total down here that's $5,800 for the whole year of all of the expenses that are not my typical expenses. So what I did at the beginning of the year is I took that number I divided it by 12 and then I divided that number by 4 so that gave me $130 that I want to put away every single week into these funds. Some months we do more in fact we've almost doubled the amount because by April we were able to save $2,900 which is well over half of the amount that we need for the whole year. But what you want to just make sure you're doing is doing this in order so you're not saving for Christmas right now if something's going to happen in June. You want to have this going in order. Now I want to show you guys my little envelopes that I've just made myself. So this is for the 4th of July and in here I have the full amount of $160. So I have a $20 bill on each one of these and as I was putting it in I would cross off until I fully funded the 4th of July. Okay so this is this one is ready to go. This one is for Mother's Day and same thing $140 I wanted it funded by May. I did the same thing here $20 bills and that one is fully funded. This is for back to school in August. This one is also fully funded this is I did it by $100 bills on this one or hundreds I guess and so there's $500 in our back to school funds. Then we have a birthday oh this is obviously Thomas's birthday in July. His is fully funded as well. This is for Father's Day this is $200 and this one is also fully funded. This is the birthday fund that's just for random birthdays and there's actually no money in here because we have taken some money out for birthdays that have already happened. So obviously you can see here we have spent $50 and I typically like to spend $25 per birthday so that means we have used two birthdays for this. And then for our baby fund we currently have $300 in here and I want to save at least $500 more for our baby by the month of August. These are a few that have already passed so Easter, Valentine's Day we've had some birthdays and then some more that we need to fund is this is my birthday we have nothing in here we have nothing in Christmas yet and then we have nothing for Halloween. So these are the only three that we have left which is actually a total of $2,350 that we need to save for this and then the rest right here the $2,900 we have totally saved. We've spent a few obviously but that's what the rest of these are for. Now at the end of this video I actually filmed myself making these in January so I will just include that at the end if you want to make your very own you can always just use a regular envelope but if you want to make it more fun and colorful and you know exactly which envelope is which then just stick around and I will show you guys how I made these envelopes. spark in the dark I don't want to say I'm okay living the same every day come run beside me let's take let's leave this place for another place oh is different it's hard at this speed to see anything tell me what you need I'll listen I'll listen it will throw a big feast with pina coladas hand in hand not out of reach it will be like much brighter take a step have no regret I don't want to sleep every night I want a lot of spark in the dark I don't want to say I'm okay living the same every day hey guys well that's everything for this video thank you so much for watching if you enjoyed this video please be sure to give it a thumbs up and also be sure to subscribe to my channel thanks again guys and we'll see you in the next video is there a place with sun all year round and pina coladas with pretty faces and sand on the ground