The Joy of Sinking Funds
How I use Ally Bank's Buckets to Make Budgeting a Breeze
Let’s talk about one of my favorite budgeting strategies: sinking funds! If you’ve never heard of them, think of sinking funds as tiny treasure chests you fill up over time for specific expenses. They’re a game-changer for anyone who wants to stay financially organized while still enjoying life’s little (and big) moments.
What makes my sinking funds strategy even better? Ally Bank’s High-Yield Savings Accounts and their nifty “Buckets” feature. This is not an ad or referral link for Ally Bank though, hey, hit me up Ally if you’d like to throw some money at me, ha!
Why Sinking Funds?
Sinking funds are your financial safety net. Instead of being surprised by expenses like Christmas gifts, car repairs, or summer camps, you prepare in advance by saving little by little throughout the year. This strategy has brought me so much peace of mind, knowing I won’t need to dip into emergency savings (or worse, rack up debt) when these costs come up.
For example:
Christmas comes at the same time every year—why not save for it gradually instead of cramming it into one chaotic December budget?
Summer camps for the kids? A must-have for our sanity, but they’re not cheap! Setting aside a little each week or month helps us embrace adventure without financial stress.
My Secret Weapon: Ally Bank’s Buckets
Ally Bank has made sinking funds so much easier. Their high-yield savings accounts already earn better interest in two months than my previous standard savings account earned in a year, but the real magic happens with their Buckets feature. Think of buckets as digital envelopes within your savings account.
Here’s how it works:
Open a High-Yield Savings Account with Ally (no fees, no minimums!) Link here: https://www.ally.com/bank/online-savings-account/
Set up your Buckets! Ally lets you divide your account into categories, each with a specific goal. Think: Christmas, Summer Camp, Auto Maintenance, emergency fund, vehicle registrations, and more!
Automate your savings. You can create recurring transfers to fund your buckets monthly, biweekly, weekly, or however often works for you.
My Buckets Breakdown
Here’s a peek into how I organize my buckets:
Christmas Gifts: Starting in January, I stash a little here weeekly so I can enjoy the season stress-free.
School Lunch Accounts (Plus sports gear & Registration Fees!): No surprise mid-year email saying the kids' accounts are empty—this bucket has us covered. It’s pretty easy to figure out how much I need here in a year (180 school days x lunch fee x #kids). Don’t forget about all that sports gear- baseball bats, cleats, shoes, mouth guards, etc - it adds up fast!
Auto Maintenance: Oil changes, new tires, and the occasional repair feel less painful when pre-funded.
Home Maintenance or Splurge Reno: The water heater, the dishwasher, the roof leak, we’re always prepared!
Summer Camps: Our kids love their adventures, and we love our sanity. Everyone wins.
Vacation Fund: Whether it’s a quick weekend getaway or a big trip, we save for memories, not credit card bills.
Kids’ Savings Accounts: Teaching the kids financial literacy starts here! Ally makes it easy to earmark funds for each child.
Emergency Savings: A non-negotiable. Life happens, and having this cushion is a must.
Why I Love This System
Visibility: I can see exactly how much is in each bucket without juggling multiple accounts or spreadsheets.
Flexibility: If priorities shift, I can reallocate funds between buckets with just a few clicks!
Automation: Set it and forget it! Automated transfers keep me consistent without extra effort.
INTEREST! Hello free money! The beauty of Ally’s system is that all the buckets sit under a single savings account, so you’re earning interest on the total balance while still having clear, organized goals.
How Sinking Funds Have Changed Our Financial Life
This system has helped me go from feeling reactive to proactive with our family finances. Instead of dreading expenses, I look forward to watching each bucket grow, knowing they’ll support the things that matter most to us—whether it’s maintaining our home, planning a magical Christmas, or giving our kids enriching experiences.
If you’re ready to embrace the peace of mind sinking funds bring, Ally Bank’s buckets are a fantastic place to start. It’s a budgeting strategy that works as hard as you do—without adding stress to your daily life.
Have you tried sinking funds or Ally’s Buckets feature? I’d love to hear how they’ve worked for you—or if you’re just getting started, let me know what questions you have!