A sinking fund is money set aside gradually for an expense you know is coming, such as a holiday, a car repair or an annual premium. Some banks let you split one savings account into named sub-balances, so each fund has its own line while the money stays in one place. The real point of sinking fund buckets is that you can see each goal separately. This post covers which banks offer these features, how the math works with assumed numbers, and a simple setup.
Why Planning for Known Expenses Works
A PCWorld review describes the second of YNAB’s four rules, “embrace your true expenses,” as budgeting monthly for infrequent costs like annual premiums, subscriptions and holidays so cash flow stays even (PCWorld). That is exactly what a sinking fund does: instead of one large bill arriving at once, you cover a small slice each month.
Which Banks Offer Buckets
The Motley Fool describes savings buckets as a way to set aside money toward a specific goal without opening a new savings account, with the bank tracking how much of your balance is allocated to each goal. It notes they help you see progress at a glance and manage several short-term goals without a separate account for each (Motley Fool).
- Ally: you can create up to 30 buckets in one savings account. Each has a target amount and a goal date, and interest is earned on the combined balance of all buckets (Ally).
- SoFi: calls them Vaults, tracked within one savings account, with up to 20 open at a time, and members can round up debit card purchases into their Vaults. The maximum savings rate requires direct deposit (Motley Fool).
- Capital One 360: does not offer buckets as such, but allows unlimited savings accounts that the article says effectively function as buckets (Motley Fool).
Automation Features
Ally describes boosters that run automatically once activated: recurring transfers that move money into chosen buckets on your schedule, Surprise Savings that transfers safe-to-save amounts of $25 or less no more than three times a week after you link checking accounts, and round-ups that move the difference to the next dollar once it reaches at least $5. As an example, a $70.72 purchase adds $0.28 toward a transfer (Ally). A personalized chart shows progress and projected growth (Ally).
Sinking Fund Buckets: The Basic Formula
Divide the expected cost by the number of months until you need it. For $1,200 due in 8 months, that is $150.00 a month. For an expense that recurs every year, divide the annual cost by 12.
Sinking Fund Buckets: An Example With Assumed Numbers
Assume eight funds.
| Fund | Per year | Per month |
|---|---|---|
| Holiday gifts | $900.00 | $75.00 |
| Car maintenance | $900.00 | $75.00 |
| Annual insurance premium | $1,200.00 | $100.00 |
| Home repairs | $600.00 | $50.00 |
| Birthdays | $400.00 | $33.33 |
| Subscription renewals | $240.00 | $20.00 |
| Vet bill fund | $500.00 | $41.67 |
| Travel fund | $1,200.00 | $100.00 |
The total is $5,940.00 a year, or $495.00 a month. Split across 26 biweekly paychecks, that is about $228.46 each, and across 24 semimonthly paychecks it is $247.50 each. A single $900 fund saved evenly over 12 months is $75.00 a month. The funds and amounts are assumed for illustration.
When the Bill Comes Due Before Month 12 (Assumed Dates)
The earlier table divides each fund’s annual cost by 12. That works when the bill arrives at the end of the year, but many bills arrive sooner, and the formula should use the months until the due date. The table below takes five of the assumed funds and gives each an assumed due date, counted in months from when you start.
| Fund | Target | Months until due | Monthly amount | Monthly if spread over 12 months |
|---|---|---|---|---|
| Holiday gifts | $900.00 | 11 months | $81.82 | $75.00 |
| Car maintenance | $900.00 | 6 months | $150.00 | $75.00 |
| Annual insurance premium | $1,200.00 | 10 months | $120.00 | $100.00 |
| Home repairs | $600.00 | 12 months | $50.00 | $50.00 |
| Travel fund | $1,200.00 | 9 months | $133.33 | $100.00 |
With due dates built in, these five funds need $535.15 a month, compared with $400.00 if you had spread them over 12 months. The difference is $135.15 a month, which is the cost of having less time before the first bills arrive. After the first year, once each fund has been spent and starts refilling, the 12-month figures apply. I’d rather see this at the start than discover a short balance in month 6.
Checking That the Buckets Add Up
One feature of sinking fund buckets, based on how Ally describes it, is that the buckets divide a single savings balance and interest is earned on the combined balance. That means a quick monthly check is possible: add up the bucket balances and compare the total with the account balance. If they match, every dollar has a job. If the account holds more than the buckets, the difference is unassigned money you can place deliberately. This check is my own suggestion and takes a couple of minutes.
- Add up the sinking fund bucket balances once a month and compare with the account balance. For the budgeting method behind this, see Give Every Dollar a Job: The Beginner’s Case for Zero-Based Budgeting.
- If a bill came in higher than its bucket, take the shortfall from the fund whose due date is furthest away, then increase that bucket’s monthly amount.
- If a bucket reaches its target early, pause its transfer or redirect it to a fund that is behind.
- At the end of the year, review which funds were over or under and adjust the targets for the next year.
Setting Up Your Sinking Fund Buckets
- List the expenses that come once or twice a year. Look back through your last twelve months of statements.
- Give each one a bucket or goal with a target and a date, as Ally’s setup does.
- Divide each target by the months remaining and add up the monthly total.
- Automate the transfer using recurring transfers on payday, so the money moves before it is spent (Ally).
- Spend from the bucket when the bill arrives, then let the fund start refilling.
My Take on Sinking Fund Buckets
- In my view, sinking fund buckets with separate named balances make it easier to see which fund is behind than one combined number does.
- I think an automatic transfer on payday keeps the money from blending into everyday spending.
- In my suggestion, reviewing the list of funds a couple of times a year keeps it matched to your actual expenses.
- These are my opinions.
Sources
- Ally: Savings buckets and boosters
- The Motley Fool: Banks with savings buckets (July 2026)
- PCWorld: YNAB review (Feb. 12, 2018)
This article offers general information and my own opinions, not financial, tax, or legal advice. The figures in worked examples are assumed. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.