Saving Money for Future Needs – Like Vacation!

Managing Money

Tammi and I have been avid fans of Dave Ramsey and Ramsey Solutions for more than 30 years. We were married at age 20 and found ourselves in a challenging financial situation. Fortunately, we discovered Dave Ramsey, in fact, on a clearance rack cassette tape in an Indianapolis bookstore! We listened to his advice and were captivated; it changed our lives forever. This journey transformed our finances, our marriage, and redirected my professional career.

Today, I work as a Financial Advisor at Whitaker-Myers Wealth Managers and hold the additional designation of Certified Ramsey Solutions Master Financial Coach. Over the past 15+ years, I have had the privilege of helping many hundreds of clients with their money management and financial planning.

Many earn good incomes, yet we struggle to manage our God-given resources effectively. Who needs an effective budget and solid money management skills? We all do. A significant part of an effective budget is the Sinking Fund, which we use to pay for future needs and wants. 

What is a Sinking Fund?

Simply put, a sinking fund is a strategic way to save money for future needs and wants.

Congratulations! You have completed baby steps 1 to 3. You have created a strong monthly budget, paid off your debt, and saved for your emergency fund. But how do you pay for future needs or wants? Some examples include car repairs and replacement, home repairs, clothing, gift-giving (for birthdays or holidays), medical co-pays, and more. We coach clients to build future needs and wants into their strong monthly budget. With summer just around the corner, and vacations on many people’s minds, let’s use vacation planning as an example of a future want.

How does our family go on a weekly vacation each year? 

To help you get started on your vacation sinking fund experience, I share how my family has developed our plan for a vacation sinking fund.

First, our family creates a vacation plan together and executes it together.

I encourage you to start with a “staycation” the first few years as you get your budget in line, pay off debt, and establish your emergency fund. This “staycation” means taking advantage of free local attractions, such as state parks, while you save for your initial “going away” vacation budget. Have a conversation with your spouse or family members and decide on an agreed-upon amount to save monthly to achieve your desired vacation budgeting goal. For reference, our family chose to begin with two years of staycations while we built our initial vacation budget.

Once you have established your vacation fund, create a thoughtful plan together. Start by setting aside your travel expenses, such as gas and meals, for the trip to and from your destination. Next, outline a daily spending plan.

My family was accustomed to using the envelope system and applied it to our vacation. We placed a certain amount per day into an envelope, which we used to track and control our spending on activities, meals, and souvenirs. 

An essential part of our plan is to go grocery shopping as soon as possible upon arrival at our destination to help reduce our weekly food costs. However, this is a suggestion, not a rule that you have to follow, as long as you build all food costs into your overall vacation sinking fund number.

We know everyone will be hungry, so we try to plan accordingly. Typically, we only purchase food for snacks and meals that will cover the first few days of our stay, which helps us avoid overspending on food. Remember, you can always return to the store and buy more as needed, but you can’t return uneaten food.

We also plan our daily activities, expenditures, and souvenir purchases in advance, gathering everyone’s input to make the vacation as meaningful as possible. This approach is a great way to have fun while staying on a budget.

Finally, we have learned from our vacation planning experiences and make yearly improvements. I highly encourage that this step not be skipped!

I’d like for you to know that it is possible to experience guilt-free spending, freedom, and peace while vacationing. Most importantly, you can have fun making memories with your family and friends!

Would You Like to Learn More Effective Money Management Ideas?

As I mentioned earlier, one of my primary goals as a Financial Advisor is to help clients manage their finances more effectively. If you’d like to explore more, please use my calendar link to schedule a complimentary session.