28 Days Richer – Day 15: Set Up Sinking Funds (Monzo Pots Style)

One thing each day that puts money in your pocket and takes 5 minutes or less.

Car insurance costs £800+ per year, Christmas spending averages £1,100, and a summer holiday can easily run £1,500 or more.

These “surprise” expenses aren’t surprises at all – they happen every year, and the only surprise is when you haven’t saved for them.

What’s a Sinking Fund?

It’s simply a pot of money for a specific future expense – a car insurance pot, a Christmas pot, a holiday pot.

You save small amounts each month so the big bill doesn’t hurt when it arrives. £800 car insurance sounds painful, but £67 per month going into a pot?

A lot easier to manage.

The Maths

If Christmas costs £1,100, that works out to £92 per month across the year.

Start in January and you’ll have the full amount by December with no credit card needed and no January debt hangover.

Holiday costs £1,500?

That’s £125 per month, or less if you book early and spread payments differently.

Today’s 5-Minute Action

Open your banking app and create a pot or separate space for one predictable expense (Monzo calls them Pots, Starling calls them Spaces).

Pick the expense that catches you out most often and set up a monthly standing order to fund it automatically.

Start Simple

You don’t need ten pots on day one – start with one.

Car insurance is a good choice because the annual bill is fixed and predictable.

Get that working, then add another pot next month if it’s helping.

The Mental Shift

Once you’ve got sinking funds running, big bills stop being emergencies and become line items.

You see the pot, you see the balance, you pay the bill.