Saving All Year for Big Expenses

This week, Maggie is sitting down to talk about saving throughout the year in order to pay for big expenses and purchases.

This week, Maggie is talking about saving throughout the year so that you can afford bigger purchases. This is also what is known as creating “sinking funds”. You can do this for lots of different expenses and purchases:

  • Annual or quarterly expenses such as:

    • Car insurance

    • Annual fees

    • Renter’s insurance

    • Taxes

    • Water bill

  • Travel

    • Holiday travel

    • Weekend trips

    • Big vacations

  • Shopping

    • Holiday gifts

    • Birthday gifts

    • Wardrobe refreshes (mention my client)

    • Expensive purchases

      • A car

      • A laptop

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The theme music is called Escaping Light by Aaron Sprinkle. The podcast artwork design is by my dear husband, Dan Rader.


Maggie Germano: 00:00 Hey there and welcome to the money circle podcast. Thanks for tuning in and don’t forget to subscribe, rate and review this podcast so that more people will hear about it. And listen, my name is Maggie Germano and I am a financial coach for women and your host here every week. If you’d like to learn more about me and my financial coaching and workshops services, visit This week I’m switching things up a little bit rather than answering a specific listener question, I’m going to preemptively talk about a topic that I think is super important, especially as we’re getting closer to holiday season and the winter travel and all sorts of things that get really expensive and can be super stressful.

Maggie Germano: 00:51 So that’s how big is saving throughout the year so that you can afford bigger purchases at all times. This is also what is known as creating sinking funds, which means that you’re setting small amounts of money aside on a monthly, regular basis in order to either pay off debt or save up for something big over, you know, gradually. So you’re making small effort over a longer period of time to get to that bigger goal.

Maggie Germano: 01:18 The reason that this topic is important, especially as I mentioned since the holidays are coming up, is because things can come up that are expensive that we can’t necessarily budget for or afford on a regular monthly basis, but they might still be something that we want to actually prioritize and take part in. For example, holiday spending or holiday travel and you know, wanting to buy our loved ones gifts or show our love in some other way that costs money and travel and see family. But those kinds of expenses can really blow up our budget and cause a lot of stress and anxiety. And in fact a lot of Americans actually go into the new year with around a thousand dollars of credit card debt due to the holiday season. So when you’re thinking about planning ahead and saving all year and really prioritizing this sort of thing all year, it’s really beneficial because you’re going to be eradicating that stress that is coming up every single year as well as preventing yourself from going into credit card debt or from, you know, adding to your existing credit card debt.

Maggie Germano: 02:26 So that’s why I think that it’s super important to be planning all year thinking ahead, building in savings as a part of your normal budget, not just for emergencies but for other expenses that can come up. So for example, and it’s not just with the holiday spending and things like that, but there are lots of reasons you might want to be setting money aside regularly throughout the year for, for bigger expenses. So that could look like saving up and preparing for annual or quarterly expenses. So this is something that isn’t always talked about, but you know, when you’re creating a monthly budget, you’re pulling in all of those expenses that are getting charged every single month. You have to pay your rent, you have to pay your utilities, you have to pay the four years student loan or whatever it might be. Those are the kinds of things that are easy to kind of plan for because they’re happening every single month.

Maggie Germano: 03:17 When you’re thinking about quarterly expenses or annual expenses, those tend to be a little forgotten until they hit your bank account or hit your credit card and then you’re like, Oh, I completely forgot about that. And now I’m over budget for the month. So these can be things such as car insurance, annual fees on things like a credit card or a subscription like Dropbox or Amazon prime or something like that. It could be renters insurance if you’re self employed or if you do have any kind of freelance income coming in, those quarterly taxes that are due. That’s really important to be setting aside a, there are some utilities that are not charged at a monthly basis. So as a homeowner we have to pay for our water bill and that is a quarterly charge, not a monthly charge. And so if we’re not setting aside money on a monthly basis and then we get that quarterly bill, it’s gonna be a little bit more than we might be able to handle that at one given time.

Maggie Germano: 04:15 So considering those sorts of things that are not being billed to you on a monthly regular basis, but that are still going to come around and you still actually have to pay them, it’s a much less painful to already have that money set aside and saved up. So adding up those amounts, so making a list, it could be in a spreadsheet so that it adds it up for you and does some of the math for you. Um, but making a list of all of those annual, quarterly, even things that come up maybe every two years, like a car registration or something like that, making sure that you have a list of all of those so that you know exactly how much all that is going to cost. And then divide it by 12 so that you can be saving that smaller amount of money every single month and you’ll have it by the time it’s due.

Maggie Germano: 05:02 So this is something that I personally do in my household with our budget. I have a money spreadsheet and one of the tabs is annual and quarterly expenses. So I have Dropbox, Amazon prime, I have my Sierra club membership that I pay every year. I have a annual donation to planned Parenthood and the women’s information network. Um, we have the Southwest credit card that has an annual fee. We also have our car insurance, which gets charged to us twice a year. We pay for a Costco membership. And like I mentioned, we have our quarterly Water bill and then I pay an annual fee for the Savage Lovecast podcast, which I enjoy. So those are the kinds of things that maybe they’re not a ton of money up front, but if they’re all hitting at the same time, or if you’re just not thinking about it and you’re not prepared for it, it can really throw you off.

Maggie Germano: 05:54 So making sure that you understand how much that costs and how you need to be setting aside every single month to be prepared can really help. So I’ve always traditionally put this money into a savings account, but more recently we got charged an extra like upgrade fee on our car insurance after we got a new car and I wasn’t expecting it so it actually hit our checking account and caused us to overdraft because I didn’t think that our next uh, in a car insurance bill was coming for a couple of weeks and so we ended up overdrafting and having to pay a fee. Although pro tip, you should always call and ask if they will waive the fee. The worst they can say is know the best they can say is yes and get rid of that for you. But I had to call asset for that to get waived.

Maggie Germano: 06:40 I was very frustrated with that and now I’ve decided as something a lot of my clients do is to create a separate checking account that is just for bills and have my monthly savings amount for my annual and quarterly expenses go into that checking account and then set up all the payment accounts to come out of there. So there’s always going to be enough money in that account for those expenses because I’m saving for them regularly so that you know, if it does come out when I’m not thinking about it or if it comes out a little early than I won’t be overdraft during the are, I won’t be taking money away from something else. So that’s a new strategy I’m going to be personally putting into place. So if you’re worried about having to remember to transfer money from your savings account to your checking account when those bills are due, then setting it up in a separate account that you can be direct depositing into or manually moving that money into every month.

**Maggie Germano: 07:36 **That’s a great way to approach it. And so as I started to mention, a great way to do this is by setting up direct deposit. So once you’ve added up all of those, uh, annual and quarterly expenses and you know exactly how much that will be on a monthly basis, you can set it up so that either your employer has the direct deposit amount going into that separate account or you have, you know, you can set up to have your bank do that for you automatically. So it’s up to you and kind of what your circumstances. So those are kind of like the bills and the expenses that you have to be thinking about and planning for. But there are other things that you might want to be thinking about saving up for throughout the year or over a course of years. So that could be things like travel.

Maggie Germano: 08:18 So it could be holiday travel, whether you know you like to go home for Thanksgiving or Christmas or Hanukkah or Passover or Easter, whatever it might be. If you know that you like to be traveling or uni or expected to be traveling home or somewhere else for those sorts of holidays, thinking about how much that typically costs you and planning for that and saving up for that over the course of the year. That could also include just normal family visits that you might want to take. So if you really do prioritize seeing your family and you want to be home for certain birthdays or anniversaries or what have you, building that into your annual plan and your savings plan so that you always have that cash saved up is going to be really helpful and actually make it possible for you to do that more often and take a lot of that stress out of it.

**Maggie Germano: 09:06 **And that can also apply to fun weekend trips that you might want to be taking with friends or family or big vacations. Like if you know that you want to go on an international trip once a year or a big domestic trip once a year, whatever it might be, whatever your priority is, get clear on what those numbers might be like. Do some research on how much those kinds of things cost, how much you might want to have in order to feel like you can have a good time and set it up so that you’re saving for that trip over the whole entire year or over a couple of years. If you know it’s going to be a couple of years before you can afford that huge trip, start saving now. It’s not gonna hurt you to set that money aside. It’s only going to help you. So something that my husband and I do is we have direct deposit set up through his work since he’s the one who has a paycheck coming versus with me where it’s a little bit more of a, a drip from the different clients.

Maggie Germano: 10:01 We have it set up so that from every paycheck, I think it’s $125 per paycheck of his goes into our travel account. And so that makes it so that we’re automatically saving $250 a month into our travel accounts. So now we’re going to Peru in November and we’re going to Japan in January. And a lot of that is going to be covered by some rewards points that we have and he’s, Japan is a partially a work trip so some of that’s going to be covered by work for him. But you know, we still will need a lot of cash on hand to be paying for a lot of the things we want to do in these places. So the fact that we already have like $2,500 in there because we’ve been saving consistently is a huge leg up and it takes a lot of this stress and worry out of what we’re, how we’re going to be able to pay for it and it’s going to let us have fun with it.

Maggie Germano: 10:53 It’ll let us do what we want to do and explore in the way that we really want to explore and really make those a trip of a lifetime. So, um, those are really cool things to prioritize and it’s just as important to plan and save for travel in a way so that you can have the experiences that you’re looking forward to as it is to make sure you can pay things like car insurance. Another thing that is a great thing to be planning for throughout the year is shopping. I know that there are a lot of financial experts out there who say that shopping for things that are not necessities is a waste of money and that you shouldn’t be prioritizing that in any way. But the reality is a lot of us do shop, we often need to shop. There are things that we have to buy or want to buy and if you can afford it and make a plan to be shopping in certain ways for whatever it is you need, then that’s totally valid.

Maggie Germano: 11:50 So that can be things like buying holiday gifts every year. I have more than one friend who loves giving gifts to people. It’s definitely their love language. And so it’s something that’s really important to them and they just don’t want to have to, you know, be in debt or go broke or be really overwhelmed every year when they’re just trying to show their love language. So saving up throughout the year is really important, especially when you know that you want to go really hard at the holidays. That can also apply for birthday gifts or anniversary gifts or just thinking of you gifts. I, again, I personally have a savings account that’s just for gifts at whenever I have a little bit of extra money, I throw it into there so that when my husband’s birthday comes around or mother’s day or father’s day or whatever it might be is coming around, there’s at least a couple hundred dollars in there so that I can buy something without having it stress me out.

Maggie Germano: 12:44 So if you have a certain amount of money that you like to budget for spending on different gifts, figure out how many gifts over the course of the year you want to be buying for people. When are those anniversaries, when are those birthdays, and how much do you want to be spending on those things and for how many people, so make a list of who those priority gift receivers are and what is that budget and so how much does that add up to over the course of the year and then divide it up again by 12 and make sure that you’re saving that every single month. Another shopping thing that you might want to be planning for throughout the year is something like a wardrobe refresh. I was talking to a client the other day who realized that refreshing her wardrobe for fall and buying a new jacket, buying some boots and buying a nice cozy sweater really revived her as she was moving into the fall season where it’s a little colder, it’s a little more dreary, and she realized that that’s something that really brings a lot of joy to her and it’s something that she really cares about.

**Maggie Germano: 13:51 **And we talked a little bit about, you know, some of the guilt and shame that kind of comes up with prioritizing that sort of thing, but that’s for a different podcast. But the truth is if something is valuable to you, if something is important, if it makes you feel better, if it makes you feel happy, then there’s nothing wrong with prioritizing that in your budget. The whole point though is to make sure that you’re building it into your budget to make sure that you can afford it, that you’re making decisions so that you can afford it when it’s time and you don’t end up going into debt and kind of making your life a little bit harder. So if going on a shopping excursion for every season is really important to you, come up with a number that makes sense so that you can say, you know, every season, so quarterly, I’m going to spend $300 on a couple new things for my wardrobe because it makes me feel good and I love it.

Maggie Germano: 14:47 If that’s important to you, do it because then if, say for the example $300 times four, that’s $1,200 so that’s $100 a month that you’d have to set aside for that sort of expense. And if you look at your budget and you’re like, there’s absolutely no way I can actually afford that, then maybe you need to sit down and see what’s a little bit more realistic and reasonable for you. But if you see that just setting aside $100 a month would save you a lot of stress and overwhelm or debt. When you get to the season where you do want to spend $300 then that actually will probably save you money and stress over time. Figure that out. If it’s something that’s important to you and again, figure out what’s realistic. You know, you might start with one number and it’s too much or you might look at it and be like, actually there are places that I can cut in order to make this happen.

Maggie Germano: 15:39 And that’s something that is so powerful about creating a budget, about sitting down and making lists. Of the things that matter to you, making lists of the expenses that you have to pay. You are putting the power back in your own hands so that you can decide what you’re spending money on and what you’re not spending money on. Cause if you realize that you’re putting money towards a place that you don’t actually care about very much and it’s preventing you from being able to do the things you want to do, like seeing your family or going on international trips or refreshing your wardrobe every quarter, then you have the information you need, the power and most likely the motivation to actually make a little bit of change. So related again to the shopping item is you know there might be expensive purchases that are coming up whether you want to make them or not.

Maggie Germano: 16:28 So if you know that your laptop is kind of slowing down and not doing what you needed to do but you really need to have a personal laptop, that can be something you start budgeting and saving up for. If you need to maybe get a new car at some point. I was just in the money circle Facebook group earlier today as of this recording and someone else who’s a member, she posted in there saying that she found out that her car might not last two more winters and she still owes quite a bit of money on it. And so she’s a little frustrated thinking, you know, in a couple of years she, her car might not be usable anymore and will she actually be able to afford a new car? So that’s the kind of thing where if she has two years to plan and prepare, if her mechanic is correct that her car maybe has two more years left, she has two years to be setting money aside in order to have a down payment on a new car or a down payment on a car, then she can lease if she doesn’t want to, you know, worry about actually purchasing a new car.

Maggie Germano: 17:33 But planning ahead and thinking forward and setting money aside regularly gives you the power to be able to make those decisions as they come. And it’s more likely to prevent you from going into debt if these things are kind of popping up because you’re not aware. So like I said, there are a couple of different ways you can approach this sort of annual planning, annual savings, sinking fund idea. You can have a separate checking account that is just for those bills that are going to come up irregularly or all of your bills really. And just make sure you have enough money in there for when those, uh, irregular ones are popping up. You can set up savings accounts that are for different things. So I have a travel savings account, I have a savings account for gifts. Um, I have a savings account for like dog expenses.

Maggie Germano: 18:22 I basically have a savings account for everything you can think of. And that’s me. I obviously have a podcast about money, so I really enjoy having different accounts and being able to watch how my goals are being, uh, progressed towards. So it’s really up to you on how many accounts you want and what is actually going to be useful versus what might be stressful. Uh, I, however, I do think it’s really important to keep your emergency savings separate from any other type of savings. So if you only needed to, if you only wanted to have two savings accounts, at least just have the emergency savings in one and then all of your other savings and the other, and that can apply to things like shopping, travel and uh, gifts, things like that. But it’s really up to you and kind of how you want to set that up.

Maggie Germano: 19:09 But when it comes to doing the actual saving, once you have that number in mind that you know how much needs to be set aside on a monthly basis to reach all of these other goals, making sure that it’s automated is going to be really, really, really important. Automating your savings is one of the only ways to make sure that you actually do it. Because we’re humans, we love instant gratification. We don’t like saving, really. It’s not fun. It doesn’t give us that jolt of excitement in the same way as buying something does. So setting it up on direct deposit. So having your paycheck have us that specific amount going into your separate savings account or your separate checking account or with some banks they will move money over for you at once. Your paycheck hits your account. So see if that’s something that’s available to you.

Maggie Germano: 20:00 But there’s also apps out there that do it for you. So digit is the one that comes to mind for me now and that is you can set up how much money should be getting pulled aside and set aside for those specific priorities. So it’s really up to you on the setup that you prefer and what actually makes sense for your situation. But making sure that it is automated as really, really, really important. Let me know either in the money circle, Facebook group or on Twitter or on Instagram. Uh, let me know the kinds of things that you’re saving up for or let me know if you have any followup questions based on this topic. Cause I know that it was a lot of information and um, a lot of like examples and details. So if you have any followup questions, just let me know. Uh, but if you have ever tried this in the past and had it work well for you, let me know. I’d love to hear about success stories and also the kinds of things that you’re excited about working towards or even just happy to not be as stressed about moving forward.

Maggie Germano: 21:10 thanks for tuning in to the money circle podcast this week. Make sure that you rate, review and subscribe so that you never miss an episode. It might not seem all that important, but subscribing and rating actually helps to get the money circle podcast in other people’s ears. If you’d like to get more connected with money circle or with me, there are lots of ways you can do that. To join the free Facebook group, visit To stay informed of any upcoming events, Subscribe to my weekly newsletter If you’d like to join the virtual money circle membership group, visit To learn more about my financial coaching services, my speaking and workshop offerings, or just to read my blog, visit You can also follow me on Instagram and Twitter at Maggie Germano. Thanks so much for listening. Bye.