How to tame your money with virtual sinking funds-with a link to a $100 bonus!

One of the first tasks I am tackling this year is streamlining our money systems. As I mentioned in my last post, our current system is working but it is messy. We have spending money spread over two different credit unions because we have separate accounts for sinking funds.

Sinking funds?

Most of us have weekly or monthly expenses, such as groceries, rent or mortgage, utilities, etc. These stay relatively stable each time. Other things are more sporadic. We pay annual fees on things like AAA or club dues. Car repairs are not needed until they are. Vet visits are not monthly, and the cost can vary quite a bit depending on what it is.

Instead of waiting for these expenses and scrambling to cover them, if you track your expenses, you can get an idea of how much you spend on them per year and then break that into scheduled savings.

Where to stash the dough?

But then the question becomes, “Where to keep the funds?” You could keep it in cash in envelopes at home, but that could go badly. You could keep it together in one savings account and track the amounts available per thing on a spreadsheet. For us, we like to know at a glance how much we have for each bucket. So we do virtual sinking funds with separate savings accounts for each category.

This setup can be tricky because most banks and credit unions have a limit on how many accounts you can have. For the past few years, our workaround has been messy. We have most of our money in Credit Union 1 (CU1) and we have most of our sinking funds in Credit Union 2 (CU2).


Pause here to say:

I know that a lot of people keep their finances separate, but we have always been all-in with ours. We have been together since our early 20s, have had a lot of ups and downs financially, but never questioned having anything but shared finances.

3 accounts for virtual sinking funds-Effective but messy

CU2 does not allow as many accounts as we need, so we have 1 shared account and then separate accounts. And so we also don’t have equal access to all of our money.

Since we do all of our payments out of CU1, we end up moving money back and forth regularly. Like for Christmas: we have a Christmas fund in CU2. We pay for most purchases with a credit card, and then pay the credit card from CU1. We have to move money from CU2 to CU1.

Both CUs are very close by so we could go into the bank and physically move the money, but when we move money electronically, we get to make notes on why the money is being moved. These notes are helpful. So we move the money and then it just sits in limbo for about 3 days while it goes from one CU to the other.

One of the things that can happen is that each of us ends up moving the same money because it is not super clear that the money has been moved until it actually moves. Plus it is just annoying to not have the money where we want it for a few days.

Streamlining to 1 account for all virtual sinking funds

We have decided to move most of our discretionary/sinking funds to Alliant. I was able to set up many savings accounts there.

We are now in the tricky business of moving the money over and setting up transfers and autopay and hoping everything lands correctly.

Once it is done, CU1 will still get some of our direct deposit and we will either close down CU2 or keep very little in it. CU1 will hold our emergency fund because they have a 1% interest rate on one of their savings accounts. We will still pay main bills out of there because it is already set up and there is no need to rock the boat.

I think that the car payment and student loans will stay in CU1 because we can hold the money in the 1% savings account until they are due. It isn’t a ton of money in interest but it is not zero so we might as well. The car payment is already set up in CU1.

Small dog in a sweater-snoozing through talk of virtual sinking funds
Dex finds all this money talk boring because he doesn’t realize he has a virtual sinking fund all his own

The plan is to have a specific amount of money direct deposited to CU1. This is enough to cover the bills and debt payments. We will leave a little extra in as a cushion. The remainder goes to Alliant. Once the money hits Alliant, it will be internally transferred to the different sinking fund accounts.

The remainder stays in the main checking or savings account, to cover groceries, medical, decorating, personal and professional development, meals out, personal pocket money, etc. Some of those categories may or may not eventually have a savings account, but for right now, they are just part of the slush fund.

This is a good time to note that sinking funds and budget are NOT the same! We literally have a line item on our budget called “Sinking Funds.” That line item is the total of the categories listed below, multiplied by 26 and divided by 12. Elsewhere on our budget sheet, we have a table that looks a lot like the one below.

Here is how we are breaking down our virtual sinking funds. I will give some explanation after.

Name Per Pay Pd
Clothing $40.00
Christmas $60.00
Kid $75.00
Car Repair/Maint $75.00
Car Tabs and Tax $10.00
Taxes $85.00
Business $10.00
Pet Care $65.00
Travel $165.00
Annual Fees $30.00
Books/Art supplies $50.00
Tech sinking fund $50.00
House $192.83
Japan $20.00
FU fund $100.00


Some of these are self-explanatory. Kid is really Ci, and is mostly paying for plane tickets home. Although it gives us a little extra money to cover mail to him, treats, and things to do while he is home.

Taxes is for income tax, lest there be any surprises. Business is mostly for this blog right now. We talk some about other business ventures and if we ever start something, we will increase the amount.

Pet care is Dex’s food, vet, and meds. We just bought him pet insurance and so that comes out of there as well.

Travel seems like a lot, but for 20 years, I have been dreaming of the point where I can truly prioritize travel and we have reached it. I want to travel now while still healthy and not put it off for another 15 years and hope for the best. This sinking fund is paired with travel rewards cards and deal scouring in order to stretch it as much as possible.

Haystack Rock-Cannon Beach Oregon
Although we have a lot of beauty a day trip away, it is nice to get further afield sometimes

Books and art supplies-it is a new line. We realized it is not a monthly expense, but it is definitely an expense.

Tech-to replace computers and phones and for any software that might be needed.

House-eventual down payment if we decide to go that way. That is one of the funds that will be increased as our income increases. We want to get it to $1000 a month, so just over double this amount.

We are planning a family trip to Japan in 2025. We are starting this fund with $1000 and will add $20 a paycheck right now, increasing it as our income increases. We want to have it at $100 a month. We will be using travel points for airline and hotel as much as possible on that trip.

The F-U fund is a new concept for me, but I love it. It is a fund that gives you a little freedom. I will copy and paste what I said about it in my previous post:

F-U money is savings and investments that allow you to live life on your terms. If you hate your job, you can look for another one more easily if you have a cushion. If you love your job but are underpaid, it is easier to negotiate if you know you will be okay no matter the outcome. If you need to go to part-time, if you need to move closer to your work, all of these things can be smoothed out if you have some extra cash. This is the year we want to start building our F-U fund.

So, how it will work

I set up virtual sinking funds as savings accounts with those names at Alliant. There is no extra paperwork or anything. Once your main account is open, you can just click “Add an account,” decide if it is checking or savings, name it what you want and you are set.

I have scheduled a direct deposit to go into the main checking account. The day after my deposit hits, a series of automatic transfers will happen, moving the amounts laid out above into their respective accounts. This will keep happening every two weeks.

I will explain how I move the money around in another post. This system ensures we have the funds that we need and puts a lot of the system on autopilot.

A shop window in Astoria, Oregon, Why? Why not

Link to Alliant’s sign up with $100 bonus

I used Alliant Credit Union because it allows for multiple savings accounts and has a .55% interest. Here is a link to the deal I used. It will give you a $100 bonus if you follow the steps. This is NOT a sponsored post and I am NOT making anything if you use this link, I am just sharing it because I think it is a good deal.