Sinking Funds

Sinking Funds

Holiday Shopping

It’s the middle of September, and I have started Christmas shopping. We have set aside money this month in a sinking fund for holiday gifts. A sinking fund is an area on your budget when you can gradually add money to for a larger purchase. Vehicle maintenance, vacations, birthday parties, and even home repairs can utilize this strategy for avoiding debt. This is how I create a holiday shopping sinking fund.

Holiday Sinking Fund

1.) List out everyone you are planning to buy gifts for. This could include anyone from your family members, coworkers, teachers, or friends.

2.) Next to each person on the list, note how much you intend to spend on that individual.

3.) Write down at least three items that could be purchased within that spending amount.

4.) List out additional holiday items you plan to buy. Think of how much holiday cards will be to print and send. Are you planning on buying any new home decorations? What are you willing to spend on a Christmas tree or new outdoor lights? Are you going to need to buy new clothes for yourself? This list could grow quickly.

5.) After you have listed your expected expenses, add up the total.

6.) How soon have you started contributing to a sinking fund? The more time to save, the smaller amounts are set aside each month.

7.) Next, start saving and keeping an eye out for sales at your favorite retailers. Do not spend the money unless it has already been added to the holiday sinking fund.


Sinking Fund Example





# 3 

Month 1  Saved

Month 2  Saved






Sun Hat 









Baseball  Hat






























Benefits of Sinking Funds

Put the money aside in an accessible account that is connected to your debit card. Check with your bank to see how many transfers between accounts you can make each month before being penalized.  Also, make sure that you are maintaining any minimum account balances.  Knowing this information can help you avoid fees.

There is also flexibility with sinking funds. You can adjust how much you add to the sinking fund to adjust to those changes with income. An August 2021 article from found that American households spent on average $1,536 during last year’s holiday season. Imagine getting a credit card statement in January with over $1,500 of impulse purchases?! To avoid that financial hit at the beginning of the new year make a plan now.  You’ll enjoy a more peaceful holiday season when you use a budget. Financial peace of mind is one of the best ways to celebrate any holiday. If you would like to learn more about creating a budget, you can follow me on Instagram and Facebook @salchowcoaching. I also offer individualized financial coaching via Zoom. You can set up a consultation to learn more about my programs on my website, Salchow Coaching.

  • Jessica Johns
    Posted at 17:07h, 08 October Reply

    This is a great way to break it down!

    • Colleen
      Posted at 19:10h, 08 October Reply

      Thank you Jessica. I appreciate your support.

  • Sara Fins
    Posted at 19:20h, 08 October Reply

    When you write it out that way, it makes it so clear and simple. Such a great strategy.

    • Colleen
      Posted at 21:45h, 08 October Reply

      We all learn in different ways, and seeing the numbers in an organized chart has really helped me take control of my money.

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    • Colleen
      Posted at 16:21h, 02 December Reply

      Thanks for the kind comment. I am happy to hear you could access the blog quickly too. What a great use of your lunch break?! Happy holidays, and happy shopping!

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