How to Save for the Holidays Using a Sinking Fund

by Sahirenys Pierce

The older I get the more expensive the holiday season seems. This is a perfect excuse to save up for these expensive holidays in your short-term goals account. They come around every year and bit us right into debt. From hosting Thanksgiving to buying Christmas presents for our loved ones, these expenses are meaningful to us. Don’t cut these special moments out of your life and budget, just because of the price tag. But, let’s figure out how in the world can you afford the holidays without going into debt? Here I want to share some tips on how to use your short-term goals account like a sinking fund for your holiday expenses.


What’s a Sinking Fund?

A Sinking Fund is simply a way to account for yearly or large upcoming expenses, by saving bit size amounts of money each month. The amount of money will grow each month and get you closer to your desired amount. You save this small amount of money each month in a separate savings account or place that you can track. The goal with a sinking fund is for you to save for what you want without going into debt. I use my short-term savings account from the High-5 Banking Method just like a sinking fund. I personally, use my short-term goals savings account to manage and track all of my sinking funds in one place.


Not just for the Holidays

One way to get ahead of these expenses is to create a sinking fund for different events or holidays in your short-term goals account.

Christmas isn’t the only time of the year where we wished we saved more money. We also have all those little yearly expenses that slip under the cracks when we are doing our budget. Some of those yearly expenses are car registration, insurances, and store memberships like Costco or Amazon Prime. Not planning these yearly expenses can easily get you into debt and behind on paying your regular monthly bills. One way to get ahead of these expenses is to create a sinking fund for different events or holidays in your short-term goals account. This is my little tip to keeping your finances organizing and your spending under control for all of these upcoming events.


Some of my yearly sinking funds are:

  • Christmas/ Black Friday Shopping
  • Car Registration
  • Insurance (Life, Car, Home)
  • Upcoming hospital bills
  • Holiday Getaways/ Vacations


How to save for the holidays quickly!

To figure out how much you need to save for all of the upcoming holidays this season, start by listing out what you want to save for by listing your top priorities. Then create a realistic budget for your list and divide that amount either by paycheck or by month. This way you can designate how much you need to pull from your income to make these goals a reality. Also, be flexible, sometimes time isn’t on your side and you won’t be able to save exactly how much you want. This is where you modify your budget and look for deals to make the numbers work.


Part 1: Create a realistic budget

  1. $500 Christmas $425 Christmas
  2. $200 Holiday getaway
  3. Grand Total: $625


Part 2: Divide amount between months or paychecks

Grand Total: $625/3 paychecks = $208.33 needs to be saved per paycheck to get to your goal amount.

Sometimes the amount you have to divide by needs be divided up by paycheck or by months. It all depends on how you get paid and how much time you have to save. Once you do a little back and forth on the numbers part, you will see if you’re able to save that amount of money or not. I always recommend to keep your monthly budget handy and take note of other expenses that might hinder your ability to save. This is where you will pause and modify your goal amounts if needed.

Also, don’t feel bad if you don’t hit the number you wanted to save or if you’re not able to save enough. This is where your side hustle and creativity can open up to find extra money. Another option to remember is that sales and coupons are always popping up randomly that you can leverage. Sometimes it’s not a money thing and just a smart shopper reflex.


Keeping up with your Sinking Funds

To keep your sinking funds organized and in a safe place, I place all the funds into my High-5 Banking Method Short-Term Goals saving account. Then, I list all the upcoming goals in a separate tab in my excel budget sheet by type and current funded amount. This way you’re able to keep track of how much has been allocated for each goal.  If you use a notebook to budget, then create a specific page to manage your goals saving accounts. You’re going to love seeing your savings grow and get a little bigger each month. Just make sure that you review this part of your budget on a monthly basis or on a bi-monthly basis.


Spend the money without shame

Now that you’ve saved as much as you could, it’s time to figure out which spending method is best for you. If you’re like me and like to shop online and use credit card points then add to cart and hold off on pressing the buy button. This is where a small note pad will come in handy. Double-check how much you can spend before pressing the by button by noting down and keeping track of your online shopping spree. I also do this during the holiday season to make sure I got everyone a gift. Now, if your an in-store kind of shopper then try using cash to keep track of how much you have to spend. These are a few shopping tricks I recommend during the holidays.

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