How to set up monthly sinking funds to keep your budget in check and stay debt free!

July 19, 2020 in Wealth - 3 Comments

Any advice given in this article is for information purposes only, and does not act as financial advice

Sinking funds are a great way at budgeting for those things you need to plan for. 

This article talks through the best way to create sinking funds and makes recommendations for accounts that help you achieve this. 

What are sinking funds?

The principle of sinking funds is to automatically save a small amount of money every month towards planned, one-time expenses. These could include items such as car expenses or perhaps something a little more exciting like a holiday. 

Sinking funds are different to an emergency fund where you have a larger pot of money you can use for unplanned expenses. For example, replacing a car or buying a new appliance when another breaks down. 

How do I set up sinking funds?

To set up sinking funds, I have found the best accounts are ones where you can have ‘pots’ or ‘spaces’ meaning your money is separated out and its purpose is clear.

I currently use both Starling and Monzo for all of our emergency funds, sinking funds and side hustles. 

Setting goals

The first question to ask yourself is, “where have I suddenly needed to use my Creditcard”? These are ideal sinking fund categories.

Also think about events that occur regularly that you could build up a fund rather than relying on, such as Christmas and birthday presents or even a holiday. 

Planning ahead for these expected expenses, will reduce stress levels and will mean you can fully fund them without adding to any levels of debt you have.


Both Monzo and Starling offer great current accounts that allow multiple saving pots/spaces. 


Monzo Personal Account


Starling Savings pots

Let us know in the comments or our socials what’s in your sinking funds!

Laura x

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  • Katie July 20, 2020 at 9:32 pm

    I’m going to look into opening a monzo or starling account as they look perfect for what I need, thank you!

    • July 20, 2020 at 9:36 pm

      I do prefer the monzo account. If you would like a referral code, pop me a DM over on my instagram page @girlsjustwannahavefundsuk I think it’s a free £5 credit at the moment z

  • RACZ3022 January 3, 2021 at 11:54 am

    Thank you!!1

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