How To Use Sinking Funds In Your Budget With Monarch Money Part 1

[@capestreasuresPtown]

Brittany Flammer sent me, This is the content I need!! Your clients must really love working with you - great job.

[@evolvingmoney]

Thank you!

[@Zephas99]

You are the first budgeting review/how to to menting Sinking Funds. Kudos! Only suggestion is to add the "Who" I have several yearly payments I need to track.

[@MarcosVictoria-h4t]

Hi there thank you for the great videos! I was wondering how do you handle Money being carried over from last month. will that reflect automatically since my accounts are already linked?

[@ricardor2797]

Fantastic Video! the monthly budgets are easy, but this has also been a confusing portion for me. Thank you for instructing on how to integrate sinkings funds with budgeting apps :)

[@evolvingmoney]

Glad it was helpful!

[@eedervs]

Thanks! I'm starting with Monarch money and sinking funds, and it was great to find this video and see how the implementation would be.

[@evolvingmoney]

Glad it was helpful!!!

[@benjamin.andrew]

Great video! Sinking funds are so important, I need to get back to these.

[@2350J]

thank you for this series on Monarch’s platform! I was using Mint so currently looking for an alternative and your videos so far have been really helpful!! 🙏🏽 quick production note as a photographer: there seems to be some over-exposed highlights from harsh light which is creating some hot spots on your face. A $40 lighting diffuser or slightly lowering the exposure/brightness on your camera may help polish the lighting exposure.

[@evolvingmoney]

You better believe it's some harsh light! hahaha! I definitely need to get a better one. Thank you for the suggestion!

[@PeterCianci]

Excellent presentation! Very helpful Taylor!

[@evolvingmoney]

Thank you!

[@RushSherman]

@@evolvingmoney Agreed, great content!!

[@rileymarzka9476]

My wife and I just found your videos and love them! I was wondering if you have that yearly expenses spreadsheet available to copy. I checked the resources on your website but didn't see it there. I know it's not complicated to make, but I'd love to save the 10 min 😁 Thanks for making these videos! They're super super helpful!

[@evolvingmoney]

Hey Riley! I'd be happy to send it your way! Feel free to email me (contact info on my website www.evolvingmoneycoaching.com)

[@Rach_lphillips]

Thank you so much for this video! I just started using monarch and couldn’t figure out a good way to do my sinking funds. This was so helpful!

[@evolvingmoney]

So glad it was helpful!

[@DrSquiresMD]

Thanks so much for this! Where can those of us that are Excel-challenged find a spreadsheet like this that automates all your input data?

[@evolvingmoney]

Sorry for the delayed response here, but feel free to email me and I can send you the sheet! You can find my email on my website here: evolvingmoneycoaching.com

[@JonathanChizick]

How should I account for payments into the sinking fund in Monarch's "transactions" section? For example, if my sinking fund is $12K/yr I'm going to send $1000 from my checking account each month into a HYSA. Monach will show a $1000 payment from my checking account in the transactions list. Should I categorize the full $1000 as "Transfer" or should I split the $1000 into each sinking category (taxes, gifts, etc...)? If it makes a difference, my HYSA doesn't export transactions into Monarch. It only exports the current balance.

[@bigchaloopa]

I have the same question 🤔. I currently transfer one sinking fund transaction to my sinking funds account per month. But my budget gets messed up when I pay the yearly subscription. I think I just need to change all these payments and moves from the sinking funds savings to Transfer category.

[@tjlasonde]

I have the same question also. She did a good job but didn't cover this. I was having a Reddit chat with a guy who told me he uses a single budget line, "Sinking Funds." He transfers out the $1000 to a HYSA, categorizing it as Sinking Funds. He also turned off the Hide from Budgets and Trends in Monarch. When it's time to spend that $1000, He would transfer it back to his checking account (categorizing the credit as "Sinking Funds") and then spend the $1000 (also categorizing the debit as "Sinking funds") so they offset. I have not implemented this yet. The idea would eliminate what she just outlined, as there would be no need to set up the rollover for each of those categories. I'm thinking, though, that I could turn off Budget by Category and use Budget by Group for the Sinking Funds Group. I could still list the sub-categories to track the individual budgets but all that matters is the top-level Sinking funds group budget.

[@evolvingmoney]

Great questions and points here!! There is soooo much to show when it comes to handling sinking funds/saving transfers. I just put up another video to expand a bit further, but I think there needs to be like 3 more here 😂 Take a look and let me know what you think!

[@veronicamoulton1836]

Good advice Spacechicken! Thanks!

[@joerizzo4726]

Great video. Very helpful. I am having an issue with mortgage payments not showing up in my budget. Also a few days ago my expense added up correctly in my budget, now 3/4 of expenses are not reflecting in budget.

[@evolvingmoney]

Are you connecting any of your expenses to goals? If so, it will move that expense from the category to the goal you attached it to. You could still see the expense in the category you assigned it to, but it wouldn't be added to the total spent in the category. I am not sure about the mortgage payments. Are they payments coming out of a account that is connected to Monarch?

[@joancraft1566]

Thank you for all the helpful info!! Does the sinking fund replace all of the Yearly categories I set up during your Categories video?

[@evolvingmoney]

They are the same thing! Yearly savings, sinking funds, periodic expenses, etc. All mean the same thing. Sorry for the confusion!

[@raebear785]

@@evolvingmoney Are there any drawbacks for having two sinking fund categories (periodic & yearly) or does it make more sense to combine the two into one sinking fund category?

[@bigchaloopa]

This was very helpful 🙂. Thank you for explaining how to set this up in MM.🎉

[@linearstream]

To add a little more detail, when you make purchases in sinking fund categories (in monarch), they will reduce your rolled over amount (should have been obvious but took me a few mins). Some savings accounts cannot be used for purchases so don't forget to fund your spending account from sinking funds in advance of purchases. Anyone have any tricks on keeping the rollover amount aligned with the sinking funds account when you replinish it? Make a Sinking Funds Savings category for tracking deposits and budget to fund it each month based on what will rollover?

[@evolvingmoney]

I recommend letting Monarch determine you bank balance for your sinking fund. If you've been budgeting for the sinking fund categories and the remaining says there should be $1000 for that category and you have a specific account for that category, then you make sure you bank balance match and move out or in any amount that makes it match. Monarch budget can help you determine how much should be in that account

[@facklerr]

Loving your videos! Hope you plan to produce more content

[@evolvingmoney]

Thank you! That's the plan!

[@lucaslee1483]

For some reason the make this category a monthly rollover option doesn't show up for me. Been trying to figure out why for a while. Driving me nuts lol.

[@evolvingmoney]

Hmm so when you click on the gear icon next to the category name, there isn't a rollover option? Make sure your categories that you are trying to turn them on are expenses, not transfers or income. Other than that, not sure why that would be the case!

[@keigwi33]

Is there an advantage to creating a category that is a sinking fund versus mixing them in with your normal expenses? For instance, I like to see all of my auto expenses in a category, so I thought about creating a maintenance fund under that category, which hopefully will not be used often.

[@evolvingmoney]

It's totally up to you! As long as you know which ones need to be budgeted for and saved for, you don't have to keep all sinking funds in their own group.

[@liamvg]

Are those colored pencil drawings on the wall?

[@evolvingmoney]

They are watercolor actually! Bought them while I was in Europe. Definitely not my art, I am not talented enough (:

[@faYte0607]

Thanks for this video. Is there an easier way for transferring enough money to sinking fund if there are multiple irregular large expenses throughout the year that are due at different months? For example, if there was a $5k expense due in Jan and a $5k due in June, I would transfer $833/mo to sinking fund. But since that large expense is due in Jan, I have to literally transfer $5k the very first month, then $833/mo thereafter. One workaround is to set a very high starting balance for the sinking fund. But this would sort of defeat its purpose....

[@evolvingmoney]

Great question! If you are just starting out with a sinking fund then yes, you do need to front-load it with any immediate expenses. The first year of a sinking fund is the hardest because you almost have to save double of what you need in order to get to a point where your $833/mo is sustainable for all the transactions going forward.

[@BenDouglas-kw5md]

Thanks for all of these fantastic videos! I recognize Car Maintenance is "usual regular" maintenance (oil changes, tire rotations, wiper blades). However what about those larger "recurring" car items (brake maintenance every 50k or other every 2-4 years). What would you suggest for that? I'm also wondering about other "emergency" auto charges (broken axle, etc...). Would those just be in the "Emergency savings" Goal?

[@evolvingmoney]

I generally leave that in Emergency Fund expenses and make sure any auto repairs that could come my way would be enough in my emergency fund as well as any other expenses that my emergency fund might need to cover.

[@evolvingmoney]

And yes, you could just leave them to the emergency fund goal in Monarch

[@Phienyx440]

If my paychecks are a different amount each pay period, is it suggested that I mark them as recurring income or no?

[@evolvingmoney]

Up to you! If you mark it as recurring it will go onto the calendar, but it doesn't really affect your budget. It just show up on the recurring calendar. For your budget, you will want to set it up to be the lowest expected amount you can confidently receive each month, and when you get more in your paycheck you can update your income for that month to allocate the extra funds towards your categories or goals.

[@csmith8146]

Interesting strategy. I like it. Wondering if it can also apply without the "set aside" feature. I typically run everything through credit cards, so instead of a high interest savings account to stash cash and then pull on demand for these expenses, what if I just wanted to track the expected expense? As long as the transaction is categorized, it should work, ya?

[@evolvingmoney]

Yes! You don't have to set a monthly budget for this as long as you know money is being set aside, but you would want to categorize and track those expenses.

[@jaceydriggs7768]

This was very informative, I'm new to the concept of sinking funds. One question lets say one month. I am short for one of my categories lets say $80 and not able to contribute anything. How do I reflect that so that in monarch it shows I am at -$80 and next month i need to save up $160 instead of $80. Or is there a better way to do this?

[@evolvingmoney]

If you have existing savings that can be used for sinking funds, you can set a "starting balance" to that category by clicking onto the gear icon next to a category name, make sure the rollover feature is turned on, then setting a starting balance. This is if you have savings that do already exist before you started budgeting in Monarch. Otherwise, you would need to plan to budget more next month to replenish the amount, or pull funds from other categories to cover that expense. Does that help?

[@chelseae.7063]

This spreadsheet is perrrrfect -- is it available anywhere?

[@evolvingmoney]

You can get this sheet in my upcoming workshop series! Announcement in my newsletter when you sign up on the website www.evolvingmoneycoaching.com

[@jerryfoster3135]

So it's basically an HSA for random expenses. Got it!

[@evolvingmoney]

Yeah! I love that comparison!

[@mac8v92]

Aren’t the goals sinking funds? Thanks!!

[@evolvingmoney]

Hey there! Yes they can be sinking funds! I prefer to use the categories though because the goals track withdrawals from savings but not charges to credit cards. So if you are putting all of your charges for a vacation on a credit card, you would need to categorize each transaction and then the withdrawal from savings to pay for the card would be marked as a withdrawal from the goal. My clients use the goals for more one-time big purchases like a wedding, car, emergency fund, etc OR tracking credit card payments. Sinking funds are the things that happen every year/every few months. But you can use the goals as sinking funds!

[@bigchaloopa]

​@@evolvingmoneyHi, can you please explain your process in more detail. I understand the individual sinking fund categories but all pointing to the same Savings Account. Plus setting them up for rollover. The part missing is how to handle the yearly payment (with a credit card). Moving money, etc. Show the reduction in the rollover? Thanks.

[@gregcampbell4467]

I just saw this and thought of the same question. This area of Goals vs. Categories for sinking funds is worth an episode. I keep going back and forth on the idea. My issue with Goals is that I seem to needs a transaction to an account, but that transaction is hard to split across Goals. Say I move $400/mo to HYSA. I find it tedious to say $200 was for future property taxes, $150 was for vacation, and $50 was holidays (3 Goals , 1 transaction)

[@pscaccia84]

Once you know how much you need to be saving monthly into the sinking fund, couldn't you just make a single category called sinking fund and use that to cover the difference on whichever category is over spent because of the irregular expense? To me that would be easier to track than multiple sinking fund categories.

[@evolvingmoney]

You can definitely do that! Just make sure you are keeping track of actual spend so that you know if you are going over budget in certain parts of your sinking fund.

[@bigchaloopa]

Hi. So I am trying to figure my average monthly spend for 1 year. Which transaction do you consider to be the Expense, The monthly accrued amount you move to the sinking fund or, the actual expense that may only happen once a year.?

[@evolvingmoney]

Good question! The actual expense that occurs once a year is the expense. transfers to savings are just transfers!

[@annamalcolm2697]

Mona has been driving me crazy with the goals and saving for goals and spending the money. This video is very informative. I also think it would be beneficial to make us specific goals versus savings video! Thank you so much.