SINKING FUNDS FOR BEGINNERS

Sinking funds - only something I had started using approximately 18 months ago when I had signed up to Monzo and was able to set up pots. Sinking funds are a great way to save up for any large expense. It's definitely something I'm glad that I started doing as spreading the cost has made things a lot easier than trying to find money in one go.

If you are wanting to get started with sinking funds and have no idea where to start than this guide for beginners is for you. I'll be explaining all the basics including what a sinking fund is,  benefits of them as well as how to create one. 

What is a sinking fund?

A sinking fund is a way of saving money by putting away a set amount each month for the purpose of being used at a later date. It means you are saving small amounts over a set period of time instead of needing to find money all in one go. This is a great idea for those things that you know are coming up and won't be able to afford from one month's income and also saves you having to go into debt.

You can set up a sinking fund for any financial goal you may have. I have four different sinking fund categories at the moment although this may change - mine are:

- Summer Holiday

- Back to school 

- B's Birthday 

- Christmas 

Sinking fund/savings /emergency fund

A sinking fund is a way of saving but should be separate from your savings and emergency fund. A savings account is where your savings go and sinking funds are how you save your money.

Sinking funds are also different from an emergency fund. A sinking fund is for those expenses you know are coming and can plan ahead for - such as for your home insurance, back to school, Birthdays, Christmas or even for things such as saving for a new sofa. An emergency fund, on the other hand, is for unexpected expenses. Examples include: damage to home like needing a new roof, car repairs from an accident, medical emergencies etc.

5 TYPES OF BUDGETING METHODS

The number one thing I recommend to anyone wanting to sort out their finances is to have a budget. Having a budget helps you to keep track of where your money is going. There are quite a few different types of budgeting methods and what works for others may not work for you. The right type of method for you, should fit with your own personal goals.

Budgeting does take time and effort, however it's great for helping you to gain financial independence by spending money responsibly, improving debt repayment strategies and  increasing your savings goals. 

5 Budgeting methods to consider 

Before choosing a budgeting method it's a good idea to sit down and  look through your finances to see if you can spot any trends. You can do this by looking at bank statements or by keeping approximately two months worth of receipts. To make it easier it's wise to sort them into categories such as household, food, personal, entertainment etc. Once you understand your finances better and understand your spending patterns then it's time to look into budgeting methods such as the five below.

The 50, 30, 20 method

The 50 30 20 budgeting method is where you plan your budget by allocating it into three categories: needs (50%), wants (30%) and savings (20%). This is a great method if you are starting out with budgeting as it doesn't mean having to track thoroughly. It's also great if you struggle with budgeting and want to find a method that's a bit more easier. You can also customise the percentages depending on your circumstances, for example 40/25/35 if you are wanting to put more into savings/debt. 

MY 2024 FINANCIAL GOALS

 In my previous post about my 2024 goals I mentioned that my top goal this year is in regards to my finances. There are quite a few financial goals that I'm hoping to achieve this year that I thought I'd share with you. 

Savings:

Quite a few of my goals this year are savings related. The three goals I'm setting myself in this area I'm sure I'll have no problem achieving.

Emergency Fund

My first goal is to save £1000 for an emergency fund. We had to use savings to pay towards our new roof and so I'm starting my Emergency fund from scratch. I've decided to do a money saving challenge where I'm putting away £20 a week so by the end of 2024 I should have achieved this.

MONEY SAVING CHALLENGES TO KICKSTART YOUR 2023 FINANCIAL GOALS

With a fresh new year here, you may have decided on your financial goals for the year ahead. If not than you may find my post from  last January about making S.M.A.R.T goals helpful. Savings are something that we all should have, but isn't always possible. In fact alot of us have no savings at all! 

There is always a good reason to put a little money aside each month. Maybe you are wanting to save for a holiday, for next Christmas or start an emergency fund. To get you motivated I'm sharing some of the money saving challenges that are around that can get you started on your saving journey.

Things We’ve Done To Reduce Our Everyday Expenses

Since the cost of living has gone up dramatically it's definitely noticeable on our finances and our money is certainly disappearing quicker. Subscriptions have gone up along with our every day expenses especially food. We are finding we are topping up our electric and gas alot more often than we use to. We've started looking into what we can cut down on and I thought I'd share some of the things I've done personally and a few joint things too.

HOW TO SAVE MONEY DURING THE SUMMER HOLIDAYS

The summer holidays are fast approaching. It tends to be an expensive time when children are off school for 6 weeks. The cost of living crisis this year is also going to make the summer holidays harder financially on families. Planning is going to be key when it comes to keeping kids occupied/entertained and fed this summer. Below are  some ideas to help you to save money during the summer holidays.

MAKING MONEY BY SELLING ON VINTED

Affiliate links in this post will be clearly marked with a *. Clicking one of these links means I earn a discount or receive payment.

I've sold items online before and didn't get on that well with Ebay and Facebook marketplace. So last September I decided to try out selling on Vinted after hearing about it for a while. I still donate to charity shops from time to time but I had lots of clothing Blake had grown out of piled up at the bottom of his wardrobe. It was doing my head in as every time I opened his wardrobe they would fall out,  plus I had some clothing items of mine I wanted to get rid of. So trying out Vinted has definitely helped me to make a bit of money. Here are 5 reasons to shop and sell on Vinted as it's not just about making extra cash.

SPRING CLEAN YOUR FINANCES

When it comes to spring cleaning it not just your home you need to think about.  Taking time to look at your finances and see if there are things you can change is a must. It's important that we get into good money habits. So that is why I'm sharing with you some of the things that you can do to make better financial choices and habits so that you get your family finances in order. There are also a great selection of financial freedom books out there that are really helpful. 

4 online side-hustles you need to try

 *This post contains a few referral links. However nothing will cost you extra.

The cost of living is increasing ridiculously with fuel skyrocketing, food prices are creeping up and even energy prices are getting to the point that alot of us can't afford them and are most likely to go even higher. It's definitely a worry for alot of people, however there are ways you can make a bit of extra cash here and there. I've featured some of the things that I personally do or have done to make a bit of extra cash. It's important to know about side hustles and tax before doing any of these.