NerdWallet's Smart Money Podcast - Feel Organized and Less Anxious About Money: The Sinking Fund System Explained

Episode Date: June 8, 2026

Learn how to set up a sinking fund system that puts your savings on autopilot and helps you reach your goals. What if the key to hitting your financial goals isn't just saving more, but saving smarter? Hosts Sean Pyles, CFP®, and Elizabeth Ayoola dig into the sinking fund system, a strategy of separate, named savings accounts each tied to a specific purpose. They explore the psychology behind why earmarking money for a specific goal feels different from keeping one lump sum, how to choose between high-yield savings accounts, money market accounts, and CDs, and the common pitfalls that can stall your progress before the system even gets off the ground. Best High-Yield Savings Accounts of June 2026: Up to 4.03% https://www.nerdwallet.com/banking/best/high-yield-online-savings-accounts  Subscribe to our podcast’s free email newsletter for bonus content and more from our hosts at https://smartmoney-nerdwallet.beehiiv.com/  Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

What do you need? Get it was faster they could after Jesse called for help. It's been too long, Cowboy. Toy Story 5 is only in theaters. So that's Lily Pan. Where are you? Some sort of old man toy? What? She thinks you're old because you're bald, Woody. From Disney and Pixar.

Toys are for play. Tech is for everything. It's Toys versus Tech. The screen just took over! All the tapping. It's happening! It's happening! On June 19.

I want to talk to you, device. A long, toy. Twitter off! Got responded. I have plastic fingers. Disney and Pixar's Toy Story 5. Only in theaters June 19th. How can working at your local Tims take you further? Sure, you can level up your teamwork skills.

You also get a chance to receive a Tim Hortons Scholarship Award. Ready for what's next? Apply today at careers.timhorans.ca. Longtime listeners of Smart Money know that I am the Sinking Fund master, but how do you actually set up this brilliant savings account strategy? This episode, we're sharing my secrets. Welcome to NerdWallet's SmartMoney Podcast, where you send us your money questions and we answer them with the help of our genius nerds.

I'm Sean Piles. And I'm Elizabeth Ayola. As Sean alluded to, maybe didn't allude, he just told y'all, we're going to be diving deep into sinking funds today and specifically how to set up your own sinking fund system. I'm actually pretty excited to have this chat because now I feel like an authority in sinking funds because I finally set some up. I'm so proud of you, Elizabeth. But, yes, clapping over here because it seems like when we first started working together,

you were a little bit hesitant. You thought it might be a little bit overly complicated. But now you're seeing the light and you realize the system is so helpful and it makes saving money so easy. Yeah. And in my words, I thought you was doing way too much. I was like, Sean is doing too much. Well, I am.

I'm always doing too much. But guess what? It works out really well for me. And you know what, Sean, I'm taking a leaf out your book. It's working out well for me too. I'm so happy to hear it. And we actually received a number of questions to various listeners. asking about how I set up my system.

So we're going to go into really specific tactics in this episode. But here is one question that a listener sent us via a voicemail on the Nerd Hotline. Let's give it a listen. I'm currently setting up my savings system. And I really like his system. How he has multiple accounts and they all have a specific purpose. And I'm trying to figure out what my system is right now. If he could explain in a podcast in detail what his system is,

how many accounts they have, what are they used for, what type accounts are they money markets, are they, et cetera, et cetera. I would find that very helpful. And thank you so much. Bye. We should probably start by talking about what sinking funds actually are in case people don't know. The general idea is that you have different savings accounts for different purposes. Like you might have one that is your emergency fund. You might have one Elizabeth that's for your kids summer vacations. I have one that is just fun money. It's all about allocating different pots of money, different values. And it's actually fairly simple. And it can get complicated if you want over time. Like I have over half a dozen savings accounts right now. Oh my gosh. You don't have

to be that extreme right off the bat. So how many did you start with Sean? How did we go from one to half a dozen? Or did you just start off strong with a whole bunch of accounts? No. I started off with like three, I want to say. I mean, it's been so many years since I said the system. It's kind of quite to remember, but I know my first one was my emergency fund. And then I figured I should probably have a fun money account. So those were kind of my two core accounts to begin with. And then after that, I was like, well, I have a house now. I should save money for home repairs. And my car is going to need to be replaced or repaired eventually too. So let me have another account for that. And then I hate my student loan. So I have another account just for the money that I pay off my student loans with. So

it has gotten more complex over time. But you don't have to have these accounts forever. Like I had one account that I used to save money for my certified financial planner education. And once I stopped doing that when I passed my exam, I closed that account. So you can have them for just a season of your life. Yeah, there's no penalty or issue that really comes with a closing of a savings account. So you can easily do that. I guess what came to mind when you said you don't have to have one permanently is that you can maybe repurpose the accounts, right? So you may have a goal, you take it off and then you use the account for something else. Or you can close it. Yeah, I decided to close it because as you said, Elizabeth, I'm always doing the most all the time.

So I figured, let me actually scale things back and simplify my finances just a little bit. Yeah, I respect it. And as you're talking, I'm also thinking that these different accounts can have or be used for different financial values. Yes. And that gets to the idea of mental accounting. And this is actually a behavioral bias that we're all susceptible to, but it's kind of a good one. The idea that if we have different prescribed values to different pots of money, we won't intermingle them as much. And with sinking funds, this is really helpful because you're less likely to tap into your car repair fund.

If you end up overspending on a weekend out and you don't have as much money in your fund money account, you might just not spend as much money going out because you've just had this divide. And it feels kind of bad and wrong to rob Peter to pay Paul to fund the night of going out when you should be saving for your car repair. Right? Does that make sense? It makes complete sense. And as you're talking, that is how it's been so helpful to me. We'll talk later about what my pots are.

But because money is allocated for something specific, I'm like, nope, you can't take it out for that. You don't have it in your budget, so you don't need it right now. Yeah. And one thing I really like about this strategy as well is that it helps you clarify your financial goals. If you think about what you could be saving your money for and then you set up a way to actually save money in this different account, it helps you make progress on that and know

what's important to you and what's not important to you. Like if you really love traveling, you might want to have an account that's just for travel, if you don't care about having a car, if you live in a city where you don't need one, then don't have a car account. And so you said that you've set up some sinking funds. I want to hear about them in a minute. But I'm wondering just off the bat, what you found feels different about how you're managing your finances since you've set these up. Oh my gosh. Before it was just a pool of chaos. Money, money, money. It was savings and then everything else. That was my system, right? I would spend for things and obviously I would know when, okay, my big spending account was getting low.

But then, like you said, I didn't have specific goals outlined or rather where the money was going for these goals. So then I've spent all the money for the goals by the end of the month. And it's like, oops, let me try again next month. And then I would find myself in that cycle. That's part of why this is key, too, is because with the system, you are doing what's called paying yourself first. You are automatically putting money into your savings account before you have a chance to spend it on something else. because we all know if we just hope that we're going to have 50 or 100 bucks saved or left over at the end of the month to put into our savings account, we might not actually have it left because we'll be spending it on other things that pop up. Oh, absolutely. And I think I think something else that was going on in my brain is like, well, I'm saving for retirement. I'm saving in my emergency fund so other girls don't need to be saved for. But that's not true, especially big ticket items like travel or car repairs. Actually, they do need to be saved towards because then the big expense come and it's like, well, I have saving.

but it's not earmarked for those specific things, if that makes sense. And it can feel so good to actually use the money that you've been saving in one of these accounts. Like I had a bunch of money, say, for my wedding and for my honeymoon. And I was just reveling and spending it every single day because I knew that I was actually having the fruits of my labor. I've been saving for years for this event. And I was finally able to really enjoy it and not worry about whether I had enough money to cover all these expenses because I knew I did. It was right there in my account. It just felt great.

You're on to something about that. because even when I'm on vacation and I'm spending, I usually don't have an allocated pot for that. It's just, again, out of my big pot. And then, again, it's just like kind of guesswork. Well, am I spending too much? How much is left over? What else do I have to pay for? Versus saying, okay, this is an exact amount that I have for spending on vacation and I'm going to enjoy it. And when I get to zero, I'm not going to feel bad about it. Yeah. And it can feel bad when you pull money to cover an emergency expense and suddenly your emergency fund is less than it was. You've been working up months or maybe years to get it to three to six months,

you're lucky to do that, and then suddenly you're back down to maybe only having one month of expenses covered. And yeah, it can feel tough, but also know that that amount that you had saved prevented you from going into debt. You didn't have to pull out a credit card to cover that expense. And you'll just gradually rebuild the savings up over time. Yeah. I would say another thing is that it has reduced my mental load. All the thinking, as you know, I'm a parent and I have to think for two and I don't know who made me an adult, but I'm also an adult who has to pay bills and stuff. So, you know, not having to think about where is this money for this expense going to come from

because it's already allocated in an account has been such a stress reliever for me. Yeah. And as someone who's a planner and an organizer, I just find that it gives me a lot of peace of mind to know that without me having to actively manage my money, everything is going exactly where it needs to. And I can just check on it by opening the app on my phone to check my banking account or dislodging in on my computer, and there it is. All right, let's move on to where we're going to put this money for these sinking funds.

A high-old savings account, in my opinion, is the best vehicle for this money. Why? Because it's liquid, too, because you're earning interest on that money. And for those out there who think a high-old saves account is an investing account, it is not. Your money should not disappear overnight, especially if you put it in a FDIC-insured account. Yeah, and building on that, I would recommend that folks check out NerdWallets to Roundups of High-Sat-Sattings account. because they change on a regular basis and the account that was best this month, maybe wasn't best last month, and vice versa. So just get a feel for what the current market is like and what kind of accounts might

work best for you because there are so many online banks that do offer high-lustavings accounts that it can be hard to choose which one is really right and which one might be best. But know your banking style. Like if you really like to do online banking and mobile banking and have it on your phone, then you might want to go with a bank that is a little more high-tech than a credit union, might be more in your community, but maybe not as savvy. Yeah.

And something I'm going to flag a mistake I made when opening my sinking funds is I did not look at the minimum balance requirement. And sometimes these banks will offer you or dangle a good rate in your face. And you're like, well, this is really high, but it comes to strings attached. Like you have to have a certain minimum balance. And maybe if you have a lower goal for your sinking fund, I don't know. Let's say you want to save $400 for something. and a minimum balance is $500, then that might be something that you want to keep in mind.

So look at the fine print before you open the account. Yeah, a lot of high-yield savings accounts do not have a minimum balance, which is great, although they can have sort of the inverse, like a maximum amount at which you'll earn the higher rate, and then above the amount that you have in that account, you might get a lower rate on what you're putting into that account. So just be mindful of that, too. And I agree with you that high-old savings accounts are typically the best option for sinking funds because they're so flexible, they're adaptable.

A lot of these banks allow you to make what they're what's called sub-accounts where you can have multiple savings accounts, and that's really the key to a robust sinking fund strategy is having multiple accounts. And it just is simple. And this is in comparison to something like a certificate of deposit, a CD, where you could, in theory, use it for your sinking funds, but know that the money that you put into this account

is going to be locked up maybe for a year or five years, whatever the term might be. And you are possibly getting a better rate than you would get from a high-old savings account, depending on the CD and the high-old savings account. But again, if you need to tap that money in an emergency or if you have to buy a car because your car broke, then you might actually lose some yield and you might face a penalty for withdrawing the money early. Again, it's just not as liquid and flexible as I think sinking funds should be. Yeah.

So think about what your goal is, your end goal before you open the account, especially a CD. Yeah. Okay. Well, let's get to some of the nitty-gritty about actually, setting up the system because that's what everyone has been asking me about. And before we do that, one quick question I have for everyone listening and watching is, why do you want these accounts? What's really the goal behind them? I think, Elizabeth, you and I outlined what sinking funds have provided us in our financial lives. But everyone who's consuming this content, however you're

consuming it, just understand what you want to get out of it. Is it to be more organized? Is it to save up for a big event or a trip? Just really understand why you want to do it. That will carry you through some of the little administrative hiccups that you might face along the way. I want to flag that your emergency funds should come first. So it's great that you have that goal of saving for vacation or buying a gift for a loved one, whatever it is. But you want to have that emergency fund there first so that in case of an emergency, you're not tapping into one of your sinking fund buckets to cover that. Right. And then once you have the emergency fund set up and you're continuing to fund it, at that point, you can begin to look into other potential sinking funds. We

You mentioned a few that you and I have Elizabeth. Like it would be a travel fund, home repair fund, a debt payoff fund could be really helpful. And one of my favorites is just my fund money account. That's for things like going out to eat or buying something that's a little superfluous. Or that's actually where most of my vacation money comes from is the money in putting into my fun account. But I have a question for you, Sean. So what is the difference between, or maybe it is the same thing? If you just have an account that you use to spend, that's your spend account.

What would be the difference between a regular spend account and then a sinking fund fund money account? Like a checking account? Mm-hmm. This is where I can get a little squishy, admittedly, where I tend to not try to tap into my fun money account until my credit card bill is due. And I know I have to cover some expenses for some superfluous fun things that I did. Or I have a trip. And I'm like, okay, I just bought airplane tickets to go on a vacation. So I need to cover this.

And that was a fun thing I'm spending my money on. Let me just tap what I have. have my fun money account. So it sounds like there's some flexibility in how you use these accounts. Definitely, especially when it comes to what's in your checking account and what's in your fund money account. For me, I kind of use both to cover some of my ongoing day-to-day expenses. Like if I'm just going to the corner store to get a sandwich in the middle of the day,

that is probably going to come from my checking even though it's kind of a want. And the fun money account is basically like a wants expense account. All right. Now, I think this is one of the most important parts. And when I was setting up my sinking funds, this is what took me the longest. Looking at your budget and knowing how much to allocate to each of your funds. And, Sean, when I tell you I went down a rabbit hole, this was an all day project. Okay.

All day. All day. Open the accounts was the easy part. So I was like, well, maybe there's a good time to actually revise my budget. I started finding things that I don't need to be paying for anymore and cutting those off. I started logging into all my accounts. I started doing some comparison shopping. Hey, am I paying too much on electricity?

I created a spreadsheet and included all of my bills and the links to all of the accounts and the passwords. Because part of those hours were taken trying to figure out my passwords for each account. Of course. Such a pain. I know. But in the end, I was able to see exactly what's happening with my money right now. I usually do a check-in once a quarter. But, hey, time and time to do it.

And then see how much I have left over to allocate to each of these pots. It was such an annoying but satisfying. You couldn't tell me anything by the end of the day. That sounds eye-opening, though, because now you are so much more in control of your finances, and you know exactly where every dollar is going. And for folks who maybe don't want to do a full of deep dive like Elizabeth did, which can be helpful if you really need that refresh, we always go back to the 50, 30, 20 budget, right?

Where 50% of your income is covering needs, 30% goes to wants, 20% goes towards extra debt payments and savings. So you're going to tap that 20%, when you're thinking about what you're going to be putting into these different savings buckets. And there is no prescriptive way to do it, except again, you probably really should prioritize that emergency fund, first and foremost, before putting all the 20% into your vacation fund. But it's subjective and up to you. And it takes a while to really find the right balance.

I know when I first set the system up, I was tinkering with it almost every month just to get a feel for what seemed right. And now and again, I still change it just depending on where my goals are and what's the priority this month versus what was a priority six months ago. Thank you for saying that because I realized by the end of the day when I had tried to calculate all the percentages for each account, I was like, this doesn't have to be rigid. Let's see how it goes for the first couple of months and we can adjust, increase, decrease, create more accounts based on what we find. Yes. All right. We'll be back in a minute. Stay with us. When you're a mid-sized business, you need every competitive advantage you can get. Like an AI solution that works for you, not against you.

SAP Grow is built with AI embedded at its core, working across every system. And it's ready to go from day one so you can hit the ground running. Bring it with SAP Grow, AI Cloud ERP for any size business. At this point, you should have what your goals are, and you should know roughly how much money you could maybe put into each of them, as a dollar amount or as a percentage of your paycheck. And then here's the key setting up direct deposit. We are very fortunate to work at a company called NerdWallet where we are allowed to have direct deposit from our paychecks into multiple accounts. And that is so helpful. And that's

how I've been able to do this really seamlessly. Although, I don't know if I've told you this, Elizabeth. One time I broke our company's system. Did I tell you about this? You did tell me and I'm going to be shocks again. What? Let me tell you how. Because when you set up, all the different accounts that you can have on the back end and the percentage of your income that you want to go to each account, it said that you can have 10 accounts. And I thought, great, I've got 10 accounts. Let me set this whole thing up. And turns out it actually at that time wasn't able to support 10. Eight was the correct number. And so after a bit of back and forth with HR and me actually not noticing for like a full month that I wasn't getting all my money,

which was my bad, I sorted it out. And now I have kept it to just eight to keep things easy and to hopefully not overstraining their system. But yeah, if you can set things up through your employer, that's probably going to be the easiest. But just double check. Do what I didn't do that one time. Make sure that all of your money is going exactly where it should be. And you can do that just by looking at your pay stub. And if you are not as lucky to have an employer that allows you to break the system as Sean did, then you may have to do a little bit more work on your end in terms of opening these account and most accounts will allow you to do, I'm always saying direct debit, which is how British people say it, direct deposit.

Yes, that's what we say in the States. Yeah, yeah. Straight from your account into that savings account. But something I will say is cash flow is important here. So if you're going to have it coming out on the first of the month, 15th of the month, make sure that you have enough money in there. Otherwise, you might find yourself in a bit of a mess. Yeah, I would like folks to give maybe a buffer of a day or two after you think when

your paycheck is going to hit to have that money come out. So that way you don't end up overdrawing your account. And one big thing we haven't acknowledged here is that a lot of what we're talking about so far is actually best for people who have a really steady income and a predictable paycheck. For people who are maybe freelancers or get paid on a regular basis for whatever reason, you might not want to have it as automated. You could maybe have a smaller amount automated of like $50 or $100 each two-week period, whatever Cadence works for you. But just make sure that you are going to have enough coming in to cover what sort of automatic deposit you have going out because you don't want to get in the situation where you are pulling out too much from an account and then have to go back and correct everything because you just don't have enough cash in your checking account. That's it.

And I think that's where starting slow is really important. And even if you're aspirational and want to have 10 like Sean, maybe you start with two, right? And then you build your way up. And once you have a good rhythm with your cash flow and with your automatic deposits, then you can. build more. And that brings me to the next thing I want to talk about. Here is what you should not do with your sinking funds. One is set up too many too quickly because that can get really confusing and you might end up making accounts for things that you don't care about. Another one is not actually putting enough money in each account to make meaningful progress. Yes, we all want to be able to fund

our vacations and buy a new car and have our emergency fund and have money allocated for home repairs. But if you can only put $25 into each account on a bi-weekly basis, you're not really to be making a lot of progress on each of them. So I would say maybe consolidate, focus on the most important ones, and try to get a little bit further ahead before you expand out to other goals. I feel a little slighted, Sean, and I know that was unintentional. One of my sinking funds, and also tell me what you think about this, is the sinking fund expert.

One of my sinking funds is for gifts. Is that a sinking fund or is that a savings account? Because I find every month I'm buying somebody gifts for their birthday, and again, where's the money coming from? So I am allocating money for that, but it's not a huge amount. It's like, I don't know, $50 a pay period, right? That's okay. Because maybe I'm giving a gift card this month or maybe it's, I don't know, you know what I mean?

That goes back to knowing how much money you need in each account for each goal. So for my house fund, a rule of thumb is to say between 1 and 3% of your home's value each year for repairs. So over the course of an entire year, that's the amount that I'm putting into my home repair fund. For you, if you know that you're spending maybe 50, 100, a month on gifts for people. You really just need to have that amount in your sinking fund. And it's okay if it's revolving and you're not accruing this massive balance because you're deploying it as you need to. It just so happens to be that you're deploying it on a more regular basis than you would something like a vacation fund. That's okay. Okay. That's what I thought. Thank you, Mr. CFP.

You're welcome. And thank you for reminding everyone that I'm a certified financial planner professional. I'm proud of you. I must. I must. So Elizabeth, does anything else come to mind for you about what not to do when setting up a sinking fund, having just set this up yourself? The main thing is credit cards. So I use my credit cards to pay for many things, and I have to be mindful to pay off the balance with the money from the sinking fund. So that, again, I have a real idea of what I'm spending the money on, and it's allocated properly just to make that mental connection versus spending

and then, you know, forgetting that there's money allocated to pay for that thing. Yeah. So using the money, in the account for its actual intended purpose. Exactly. Yes. Yeah, I get that. And that can be a challenge too because sometimes I feel tempted to dip into what I have my emergency fund if I've had like a really expensive month.

And that's not actually an emergency. It's just me overspending and not listening to what I set my budget up to be. So I try not to do that as much as I can. But I get the appeal. It can be really tempting. It can be. But yeah, I would say my biggest first. friction point has been, now I can see where all my money is in each bucket, you know? So it's like,

oh, I want to buy X, Y, Z. Well, what bucket is it coming out of Elizabeth? Oh, well, you don't have any more in your fund money bucket. And you can't take it from the travel bucket or the gift bucket or the emergency or the emergency fund because it ain't an emergency. So I guess you got to wait until next month. I'd say that friction is kind of the point, right? You want to have these guardrails so that you aren't overspending in a certain category and you are saving as much as you really want to a need to in these other categories. Yeah, that's it. Okay.

Well, let's go a little deeper into each of our own sinking fund setup. You really just set this up for yourself quite recently. So can you talk about what your various savings accounts are? So at the moment, I have a travel fund because I'm always traveling at some point during the year. And also, I realize I have not been accounting for the childcare that I have to pay for when I travel by myself. And that's usually a scramble.

Like, oh, I paid for the trip, but now I have to pay extra to $5, $600 for the babysitter. And then I'm just pulling it from, I don't know, the air. So I have my travel fund. I have my gift fund, as I just mentioned, because I noticed when I was going through my budget, I'm like, what's a recurring expense that maybe doesn't have to do with bills? And I'm always, you know, it's a kid's birthday, friend's birthday, partner's birthday, whoever.

So set up a gift fund. This, we establish, is not exactly a stinking fund, but it still has been nice to set money aside from it. You know, I opened up a flexible spending account. So I have money that goes straight from my paycheck into there for summer camp. and other holidays where I need child care. Those right now are my main bucket. I started off small.

It's working for me. I have a quote unquote fund money account, but that is just a checking account. And I get actually cashback rewards on that account. So I decided, hey, I should maximize that and actually use it while I'm spending on my frivolous things. Those are the main ones I have. And your emergency fund is in your high old savings account as well, right?

That's right. That's right. Yeah. Nice. But I've had that for ages. So yeah. Yeah. Did you decide to go? with the same bank that you'd been using, or did you shop around at all in this process?

Well, as a gal who learns from her co-host, we had a discussion about sinking funds not so long ago on the show. And I know you mentioned that you keep all of your sinking funds with the same organization to make it easier for you. And I was like, hey, I like easy. I'm going to do that too. I recently moved my emergency fund to a new high-yield savings account. So I just decided to open all my sinking funds with the same provider. So now when I open my app, I can see all. all of my savings accounts in one place, and it's just so easy.

I think that's really smart because these sinking funds can get a little complex when you have, you know, half a dozen savings accounts. But if they're all with the same institution, you just open the app on your phone or log in, and then you see them right there in front of you. So it's really not all that complicated to track versus if you did have them across two or three different banks, that could get confusing. And as we all know, the administrative burden of managing money is so cumbersome sometimes that you want to disengage.

Like you said earlier, Elizabeth, just knowing your password can be a huge barrier. And it'll make you just want to walk away from the task and say, I'll do that later. And then it turns out you don't do it later. So try to keep it as simple as you can amid the slight complexity of having multiple accounts. Yeah.

Well, I know you said that you did this ages ago. Well, I guess I already gave you away. But yeah, so your process is what? Let's dive into yours, Sean. Okay. I'm going to pull up my savings account right now because honestly, it's hard to keep track of accounts. Yes, plural.

It's hard to keep track of how many I have at any given moment, but I haven't changed them in a minute. So I'm going to guess, actually, I want you to guess how many I have right now. Well, you said 10. And because you're extra, maybe it's 11. Okay. Across all of my checking and savings accounts,

it's closer to 10 or 11. But right now with my savings accounts, I have seven. Oh, okay. And one of them is my wedding fund that I just haven't closed yet. So you're going to close that one. I really have six that I'm using on a regular basis. But then beyond that, yeah, I do have a checking account.

I have a personal checking account. I have a business checking account. I have an old checking account that I've had since high school. So, you know, it gets a little bit closer to that 10-ish number. But a lot of them I'm not engaging with on a super regular basis. And that's fine. And how did you do the math deciding? how much to put into each account from your paycheck,

because I imagine that is where some people may get a little stressed out. Well, like you, when I first set it up, I did a bit of a deep dive. I don't think I went as far as you did, although I love that this could be a moment for people to get way more acquainted with their finances. I just knew to start that I really needed to build up my emergency savings. And right now I'm actually at a place where I have plenty in that account, so I've stopped contributing to it. Oh, that must be great.

So I'm just earning interest that's continuing to grow the balance. but at a certain point, you don't always need to be adding to your emergency fund. So at that point, I did other things like, okay, I, like I said before, I'm putting in between 1 and 3% of my home's value into my house fund. And then some of the other amounts were a little arbitrary. Like I want at least $100 going into my car fund because I think that over time that will get me to a place where I can cover at least annual repairs. And if gas is really expensive one month, I mean, gas is wildly expensive right now.

but if I'm driving a lot of certain month and I have a higher bill than usual, I might dip into that just to help me feel better about myself. It's kind of an intuitive process. And I think if I don't have a specific number that I'm saving for, like if I have a vacation coming up in six months where I need to save a few thousand dollars for international travel and hotels and all of that, if I don't have a big concrete financial number in mind, then it can be a little bit loosey-goosey. I just like to have enough going in there that's covering my day-to-day expenses. When you just said that you stopped putting money in your emergency fund, and now you can put that towards house repairs or you're putting more money towards house repairs, that's actually the part I'm really looking forward to. So as you know, I'm going to be paying off my car this year.

And as I was doing the school run this morning in the car, I was thinking, wow, what do I want to put that $500 towards? Which fund can that go towards? Either my emergency fund, my travel fund. But it is really fun, you know, when you're able to tick off a goal, and then you have more money to put somewhere else. You know what I did when I paid off my car, I put the amount that I was paying on my car note each month,

and I decided to allocate that amount. It was like $350 into my car fund. Oh, that's smart. You're actually saving for your next car and repairs that pop up in the interim. Why would you even talk about a next car? Do you think I want to think about spending thousands of dollars again? Me either, but you know it's going to happen eventually, right?

So you might as well get ahead of it. We'll talk about that in another episode, like what kind of car I want next. But anyway, that's in the far future. Yeah, I want an electric vehicle, but my car is still under 100,000 miles. I want to have it for at least another five years. So I'm in no rush, and I'll just keep putting my money into my house savings account and gradually build it up and buy a new car when I need to. But isn't that exciting to have such a long horizon in the sense that five years from now,

if you're diligently saving, buying a car won't be so financially stressful because you have this big pot of money. Yeah, but speaking of the time horizon, And some people might say, oh, why don't you just invest if you have five years? True. That's kind of on the borderline of when people might say you could write out some ups and down to the stock market. When it comes to this, I'm just risk averse. So I want to have it liquid to also cover things like car repairs or whatever else might come up in the meantime.

So that's why I keep it all in my high-alt savings account. I would do the same. I think that that is kind of the long and the short of it, maybe just the long of it, because we went so deep into how we set up our systems here. If anyone out there has set up their own sinking fund system, I'd love to hear how you did it, what you're saving for, what hiccups you run into, anything that we've just talked about here. I always love to be here what our listeners and viewers are up to. Well, that's all we have for this episode. Remember that we are here to answer your money questions, so send them to us.

You can hit us up on the nerd hotline by texting us or leaving a voicemail at 901-730-6373. It's 901-730 nerd. You can also email us at podcast at nervalyt.com or drop us a comment on Spotify or YouTube. Come hang out with us next time. We're going to be talking about how to manage your finances if you're going through a big career change. Until then, follow Smart Money on your favorite podcast app, that's Spotify, Apple Podcasts, and also IHeartRadio, to automatically download new episodes. Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to

your specific circumstances. This episode was produced by Tess Figlin, Hillary, help with editing. Eve Krogman edits our audio and also our video. And a big thank you to NerdWallis editors for their help. And with that said, until next time, turn to the nerds. Hey, smart money listeners, we have a brand new email newsletter and it's completely worth signing up for, especially since it's free. Every issue has clips from recent episodes, links to stories you might have missed, and also behind the scenes commentary from me, Sean and our producer. Some of it is stuff that doesn't make it into the episodes. The context, the moments, the takes we didn't plan on sharing. You can think of it as the group chat for smart money fans. I'm going to be sharing inside details

about parenting and money. Yes, I'll be sharing all the juicy stuff. And I'll have loads of tips about what I'm doing in my garden. So if you want to putts around your garden like I do, sign it for the newsletter. And also, you know, we have money tips and all that kind of stuff. So head tonerdwollet.com slash podcast to sign up. Again, it's free. That's nerdwallet.com slash podcast. We'll see you in your inbox.