Best Practices for Tracking Sinking Funds with Budgeting Apps

Seeking Advice Forum
1

I’m looking for advice on how to best manage sinking funds using budgeting apps. I’m currently using Snoop and I’m struggling with how to accurately categorize and track spending from my sinking funds.

For example, I have a sinking fund called ‘Self Care’ where I save around £40 every month for things like getting my nails done or other little treats. Right now, I have a custom category in Snoop called ‘Self Care Fund’. At the start of the month, I categorize the £40 transfer from my current account to the sinking fund as spending in the ‘Self Care Fund’ category. However, when I actually use that money for something like a manicure, I categorize the spending in the same ‘Self Care Fund’ category. This seems to cancel out the transfer and results in the total budget for that category showing £0 spending, which isn’t very helpful. :sweat_smile:

I’m wondering if there’s a better way to handle this. Should I only categorize the initial transfer to the sinking fund in the ‘Self Care Fund’ category and then categorize the actual spending in a different category (like ‘Health and Beauty’)? If I do that, I’m worried I might lose track of the funds.

How do you manage sinking funds in your budgeting apps and ensure accurate tracking of both contributions and expenditures? Any tips or strategies would be greatly appreciated…Thanks :wink: :wink:

2

To track sinking funds with budgeting apps, create separate funds for each goal, set up automatic contributions and review regularly. Make sure your app syncs across devices and use notifications to keep track. Adjust as needed to stay on top of your savings.

3

Tracking sinking funds can indeed be challenging, but the key is to clearly distinguish between adding to the fund and spending from it.

Here’s a suggested approach:

Create Separate Categories:

  • Sinking Fund: This category is for tracking the money you allocate to the fund.
  • Self-Care Spending: This category tracks your actual spending from the fund.

Categorize Transactions:

  • Allocating Funds: When you transfer money into the sinking fund, categorize it under “Sinking Fund.”
  • Spending Funds: When you use the money, categorize the transaction under “Self-Care Spending.”

Additional Tips:

  • Use Subcategories: Consider creating subcategories within “Self-Care Spending” to track specific expenses like haircuts, massages, or gym memberships.
  • Regular Reviews: Regularly review your sinking fund to ensure you’re on track with your goals.
  • Separate Account: For larger sinking funds, consider opening a separate savings account to keep the money physically separate.

This method will help you manage your sinking fund effectively while keeping your spending organized.