Perfect the Act of Sinking Funds!

a syncing fund helps you set aside money each month for a particular expense or savings goal throughout the year perfect the act of syncing funds in this video I'm going to be sharing why syncing funds are a GameChanger for your budget some examples of how to use them and put them into action using my budget [Music] spreadsheet hey guys welcome back to the debt free Millennials Channel I'm your host Justine and here we talk about all ways to Achieve Financial confidence Crush debt that leads to more fun of fewer payments if you're into that lifestyle be sure you're hitting that red subscribe button now there are two ways to use a syncing fund one is for bills and the second way is for savings goals syncing funds work great for irregular expenses such as bills that you might be paying annually by anually or every other month now instead of waiting for that particular month to come around when that bill is due and scrambling and trying to figure out how you're going to be paying for it out of your budget a sinking fund helps you set aside money every single month so when that bill is due all you have to do is transfer out out of your syncing fund back into your checking account and make the payment some examples of syncing funds that you can use for bills include car insurance premiums that you pay every 6 months so that you can get a discount perhaps it's a water bill that you pay by monthly or annual subscriptions such as Amazon Prime apps or Home Security Services when you are using syncing funds for savings goals big goals like a trip to Thailand in 8 months or buying a replacement car in 3 years have a definitive goal date this makes it easy to figure out how much money you should be setting aside every single month for that particular savings goals but not all syncing funds need a definitive end date for a savings goal such as your clothing budget I like to set aside $50 every single month inside of my clothing budget so that I can let it build up over time then when I see something on sale or something that I really like to purchase I can simply pull the money outside of my syncing fund and pay for it in this way you can let the money build up over time and you don't feel guilty from spending from your budget Now using syncing funds for savings goals include things like a vacation a replacement car maybe a down payment other budget expenses like fund money where you're spending money on entertainment clothing shopping or even maybe a really robust Starbucks budget okay so am I sparking any ideas here for you let's go ahead and hop inside of my budget spreadsheet to show you how to set up the syncing funds in order to utilize this budget spreadsheet you're going to head over to Deb freame millennial.age example monthly budget template that's where I'm going to be working out of and what you're going to be seeing for your monthly budget every single month you're just going to hit this down arrow and then duplicate to start making your own copy by the way you're going to have to make it your own copy of this budget spreadsheet because this is the master and I want you editing it for your own purposes so here's how this works out what you're going to do is you're going to plan for that particular syncing fund expense for you it might be the car insurance premium that you're paying every six months but you want to set aside monthly contributions now a lot of people ask me justing where do I put the syncing fund savings that I'm going to be building up over time I would suggest using a high yield savings account for that particular expense now if you're using something that's B monthly and you really just don't want to continue to transfer from a checking to a high Y old savings account and back and forth you could just keep it inside of your checking account so long as you're earmarking it and using the budget as a way to track exactly how much money you have built up so let's say you have a car insurance premium that's $500 every 6 months so it's $500 divided by 6 months you need to be setting aside around $83.33 so let's just call it an even $84 to put inside your budget under the plan section you're going to be planning on putting aside $84 for that car insurance premium to build it up to $500 over time under the actual column even though we're not actually making that car insurance premium payment in this particular ular month we're going to actually earmark that because we're going to be transferring it from our checking account into our high yield savings account so that money is gone and we're not accidentally spending it on anything else now you'll notice when I did that the running total column actually updated to $84 that's because what I'm actually setting aside for minus what I'm actually spending is the running total now when that car insurance premium payment comes due you're going to actually record what you spent from the syncing funds not from your budget because again we're setting aside the money so when that car insurance premium comes due and you make the payment in March and this is your March monthly budget you'll actually go ahead and put the $500 here now as you're doing this month over month this amount over in the running totals column is going to build up over time just be sure that the calculations and the formula is updating every single month so that it's 8 $4 plus the $84 plus the $84 every single month until you hit that $500 premium amount okay if that is making sense to you this is how this all works by the way if you ever need to refer back to just some notes about syncing funds I've including it under the notes for Planned actual right here if you're using a sying form for an expense move the amount of money over to your savings account and record it under actual and then if you've actually spent money for that fund like you actually paid an annual subscription then you would record it under spent from syncing funds not from actual and then the running total is going to update notice that I don't have running totals for all of the different expenses because obviously there are some expenses where money is not going to be carrying over such as your rent or mortgage payment cell phone internet all of that good stuff that stuff is not going to be running over but things like especially for the fund money categories things like restaurant shopping clothing haircut those things can run over so let's say you wanted to do a syncing fund for restaurants you're like how does that work if you want to have leftover money for your restaurant budget or you just want to have $400 for your restaurant budget and then let that build up over time you absolutely can do that so let's say you want to do a restaurant budget of $400 let's make sure I'm just going to copy over that calculation over here by just highlighting that cell clicking in the bottom right hand corner and dragging it up to make sure that I have that formula calculated here and let's say that I do want to create a sinking fund for a restaurant so regardless if I spent $400 or not I'm just going to go ahead and set that money aside of $400 that's that way it is calculated and removed from my take-home from my expenses so you can actually see that up here I've got to adjust some things because I have a negative amount you always want a zero zero uh balance when it comes to this and by the way if you're like I don't even know how to use this budget spreadsheet I have a whole tutorial for you that walks you through through it right up here in the cards all right so now once that's set up you can actually see we have $400 to spend in restaurant syncing fund if you actually make a purchase on restaurants for that particular month I like to hit the equals sign and then add up all the transactions that are for restaurants for that particular month so let's say it's $45 $75 and $13 and I've made three separate restaurant transactions now you can see I've actually spent $133 from my $400 syncing fund so the ACT what I set aside of $400 minus what I actually spent I have $267 left over in my syncing fund now you can do this for all sorts of fun money categories and what I love about this is if you wanted to continue to carry over the $267 at the end of the month for your restaurant budget you could do so for the next month continue to add $400 and now you have $667 for your restaurant budget little Overkill I don't particularly use sying funds for restaurant budgets but maybe you want to I really like using it for clothing because I do e regular clothing purchases throughout my year some months I don't spend money on clothes other months I'm spending a lot of money on clothes it really just depends on the season or time of year and so that's why I really like to use syncing funds for particular expenses that don't have an end date if you wanted to use this for a savings goal that does have an end date I like to do that over here in the future category so down at the bottom if you wanted to save up for a new car for example and let's say it's $24,000 and you want to save up for it in 3 years so 36 months so $666 or let's call it 667 just for even round numbers and we're going to go ahead and put that in our budget as $667 is what we're going to be using and this is month one out of the 36 months that we have to really come up up with this amount of cash so what I'm going to do is I'm going to hit equals plus what's in the actual what I'm actually setting aside because maybe there's going to be a month where you can't put $667 maybe you can put less than or more than so we want to include what we actually set aside minus what we actually spent from the syncing fund and get our final running total amount so in this particular month if we're making that move from our checking account to our savings account we've got the 667 ready to go it's going to update here in the running total now you can always double check yourself by looking into that particular high yield savings accounts which is where I would put your new car syncing fund and make sure that it's reflective of what your running total says inside of your budget now I got the question what happens if you spend more than what you had set aside in your syncing fund well the money has to come from somewhere you're going to have to make adjustments inside of your budget maybe a particular budget category gets lowered so that you can make up the difference one really great tip that I have for you when it comes to over spending in a particular area is always have a buffer this is the what I call the O fudge category or your miscellaneous category where you always have a buffer of let's call it $100 and so that $100 can be moved to that particular fund where you overspent now this is not a time where you use your emergency fund to cover any overages that you might have had from a sinking fund emergency funds are only for unexpected expenses true emergencies not a oh it was unexpected that I had to pay for a bridesmaid dress that doesn't work you're going to have to move some things inside of your budget in order to make up for the overages inside of your syncing fund all right any questions about sinking funds that I did not cover please address them and put them in the comments below but now that you know more about sinking funds let's go ahead and put them into action by using my budget toolkit you can download that for free using the link below to get you set up for Success this year with your finances be sure to like this video And subscribe to the de free Millennials channel to join the community of thousands committed to upleveling their money this year and I'll catch you in the next [Music] one yeah