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

July 19, 2020 in Bank Accounts, Saving Money - 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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  • Claire Simpson-Graves July 28, 2020 at 8:29 am

    I love Sinking Funds, and use Starling to track mine. So easy and convenient!

  • Grace July 31, 2020 at 12:28 pm

    I need to start doing this, I’m terrible at savings but these savings pots look great. I heard one of the banks were in trouble but I can’t remember if it was starling or monzo… but must do this soon!

    • Rachel Bradbury August 2, 2020 at 5:45 am

      Oh this is such a good idea… I’m checking out the Monzo bank account right now. I love the idea of having sinking funds!

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