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How You Can Use a Sinking Fund

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A sinking fund is a simple budgeting method that allows you to prepare in advance for future purchases and allocate a certain amount each month or week to pay for these. 

Have you ever felt like sinking into the ground after splashing out on a long-desired purchase? Let’s face it, we’ve all been there. A sinking fund can help you be prepared for larger expenses.

What Is a Sinking Fund? 

Dave Ramsey, a well-known financial advisor has suggested using the sinking fund method.

How exactly does a sinking fund work? 

Let’s say you are looking to buy that $1,000 laptop – for your spouse, of course – by Christmas.

  • If it is April, a sinking fund has 8 months left to work its magic.
  • Divide $1,000 by those 8 months and you get a set amount of $125 to put aside per month for that category. 

Is a Sinking Fund the Same as General Savings? 

Unlike general savings, a sinking fund gives you a specific purchase goal and a way to get there.  

Savings accounts may be used for anything under the sun. Whereas a sinking fund is an allocated amount of money intentionally set aside to pay for, say, that outfit for a friends’ wedding, or new tires.

What About My Emergency Fund | Does That Need To Change? 

A sinking fund can be a game-changer, but may not be as crucial as 3-6 months saved in an emergency fund.

Basically, an emergency fund is a safety net for the unknown expenses that life may throw. A sinking fund is a deliberate saving for a known and specific cause. 

How Does a Sinking Fund Fit on a Budget? 

It may be as simple as adding a line to your budget and reallocating expenses from there, depending on what you are saving for. 

The following are 4 key steps to implementing a sinking fund: 

1. Identify What You Are Saving For

Identifying what the purchase is and the exact cost has to be step number one. Larger expenses such as roof repairs or family vacation are a good idea to prepare for months in advance. 

2. Choose Where Your Fund Will Be

Whether in the form of an envelope of cash or an interest-bearing savings account, a sinking fund gives you the flexibility to control the amount kept aside. 

However, be mindful of bank fees if you create a specified account, as these can inch up your expenses over time.

On the other hand, if you decide to keep a fund in the form of physical cash, ensure the security and the safety of where that will be stored.  

3. Decide How Much To Save 

It is necessary to decide how much you need and how much you are prepared to save. Take that total amount and divide it between the number of months or weeks you have left before the purchase date.  

https://www.forbes.com/sites/jimwang/2020/01/24/6-reasons-to-start-a-sinking-fund-now/

You can also decide what months you will or won’t have enough left over to devote funds. This allows for flexibility if you are a variable income earner. 

4. Add a Line To Your Budget

Regardless of what kind of budget you have, by adding a row or line specifically for your monthly or weekly payments towards your end purchase, a sinking fund can easily be implemented. 

Having a sinking fund does not have to, and, ideally, should not replace debt repayments, savings, or emergency funds.

A Simple Method

Starting a sinking fund is a simple and transparent means of regaining better control overspending, and keeping some certainty over the future. Avoiding credit debts and loan repayments can alleviate worry and guilt, and elevate your peace of mind. 

How to Tip in Every Situation

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We all know how important it is to tip the people who provide a service to us. Whether it’s a waiter, a food-delivery person, or a hairdresser, it is generally considered important and ethical to tip in most situations.

However, the amount you tip, how you tip, and when it is okay not to tip, all vary from situation to situation. Plus, it can be an uncomfortable scenario to calculate how much you should tip at the very last minute.

Let’s go through a general guideline on tipping etiquette.

When You Should Always Tip

In some instances, there is no question on whether you should tip or not. Here, a tip is expected and necessary to let the service provider know you appreciate them.

https://www.realsimple.com/work-life/money/money-etiquette/tipping-etiquette-guide

Many of these people depend on getting tipped as they earn a base wage.

Restaurants

Restaurants are one place where you should always tip. Waiters are often being paid less than the minimum legal salary. So, tipping a waiter supplements their income. 

Generally, you should try to tip between 15-20% of your overall bill. While tipping for good service, 20% is recommended.

When in a group, each person can tip some cash according to their meal. 

Many people wonder if they should tip on the overall bill, including the restaurant tax, or the pretax amount. If it is affordable, it is always best to tip on the total amount. 

Bars

When you’re at a bar and ordering drinks, you can just tip a flat amount rather than calculating a percentage. 

You can leave $1 for a beer and $2 for a cocktail. If you order snacks or food and the service is good, you should then tip 20% of the bill. 

Hotels

When it comes to staying at a hotel, you must remember to tip the housekeeper who cleans your room. Rather than tipping a large amount while checking out, you can give 2 to 3 dollars each day to housekeeping. This is because, in many hotels, the housekeeper changes each day.

If you were staying with kids and pets, that means additional work, so you may want to consider tipping a little more in this case.

Hair or Nail Salon

Typically, 15% is a decent rate to tip at salons. It is best to keep some cash aside to tip the person who provided their services to you.

Babysitter

Many people believe in only paying the hourly rate that was agreed upon with the babysitter. However, it is a good idea to round off the figure to a solid number. This is a way of showing appreciation as some days can be hectic or involve additional chores. If the payment amounts to $45, you could pay $50. 

For regular babysitters, you could buy gifts for them on special occasions and holidays, or pay a bonus at the end of the year.

When Tipping Is a Little Tricky

There are some situations where there is a grey area and no standard tipping rule. Let’s look at such services and how you can make tipping decisions. 

Cafes

It’s not necessary to tip at a coffee shop but it’s always considered a nice gesture. If you go to the same cafe regularly, get a special order, or good service regularly—consider tipping!

If they make latte art for you or serve something complimentary, you should try to tip. A good rule of thumb is 20% of your bill.

Food Delivery

Food delivery persons don’t need to be tipped as much as waiters. When receiving your food, handing over 3 to 5 dollars as a tip is a good idea. If the delivery person arrived in less than ideal circumstances like rain or snow, or if the order was large, you should tip some more. 

Movers

Although there is no obligation, it is sensible to tip movers especially if they moved heavy luggage or carried items up or down a flight of stairs. You should try to tip about $15 to $20 for each mover.

Taxi Drivers

Taxi fares are usually so high that it can get tricky tipping taxi drivers. If you have the cash, try to spare 15-20% of the fare as a tip. Uber and Lyft will even calculate tips for you based on percentages.

Doormen

You do not have to tip the doorman of your apartment building regularly. However, giving a monetary gift at the end of the year is a nice gesture.

Unsatisfactory Service

This is a tough area to deal with. Sometimes, your hairdresser or waiter might make a mistake.

This does not mean you should skip tipping them altogether. If the mistake was repeatedly made or caused damage, you can tip them less than you normally would.

When NOT to Tip

In some circumstances, tipping is not necessary. In fact, there are some professions where tipping is considered a bad idea.

Teachers

Usually, it is not allowed for teachers to accept cash from students or parents. It would be wise to consult the school for rules on gifts to teachers. Sometimes, there are also rules on the value of the gift, which cannot be exceeded.

Nurses, Doctors, and Therapists

Workers in the medical profession are often not allowed to accept money as a gift. It is better to give them a “thank you” card or verbally express your gratitude to them.

Employees

It is considered improper and inappropriate to give cash to employees at a workplace. A formal bonus is not the same as giving cash in this way. 

Rude Behavior

Sometimes, the servicer can be extremely rude or ill-mannered towards you. If their behavior is very negative and unacceptable, it is okay to not tip them as a way to express your disapproval for bad customer service. 

Whereas rude behavior falls under this clear category, you should not mistake it with poor or faulty service, which may or may not be the servicer’s fault.

For instance, if your food took forever to arrive, it may be due to a fault in the kitchen. So, in many situations, not tipping at all is not considered a good move.

If the taxi driver is reckless or ill-mannered, you do not owe them a tip in exchange for bad services. Similarly, a hairstylist who is inattentive, rude, or unapologetic after making a mistake also does not need to be tipped. If your room remains untidy or dirty, you can skip tipping the housekeeper. 

The best way to go about these incidents is to keep an open heart and always judge the person fairly. As a general rule of thumb, always try to tip the person who provided you a service. In grey areas, trust your gut and try to give some extra cash if your budget can accommodate it. 

You should also look up the tipping norms in other countries when you are traveling. For instance, most countries in Asia are relaxed and many restaurants there include service charges within the restaurant bill. In Europe, it is considered normal to leave the change as a tip or giving 10% or less in many situations.

Image credit: [KAROLINA GRABOWSKA]

Costco vs. Sam’s Club | Which Will Save You More?

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If you love to shop in bulk, you are probably familiar with the Big-Box retailers Costco and Sam’s Club.

While both of these stores can save you a lot of money on groceries and other household goods, you may be wondering which will give you the most savings.

Sam’s Club and Costco are very similar in their pricing, but there are some differences.

  • Costco offers a slightly lower price-per-unit average overall.
  • While Sam’s Club has lower membership costs and a wider variety of products.

Both Sam’s Club and Costco can work well for your bulk grocery needs. Keep reading to learn more about an overall savings breakdown as well as the particular disadvantages and advantages that each store has.

Choosing Between Costco and Sam’s Club

Both Sam’s Club and Costco were made with customer savings in mind. These retailers offer bulk groceries at a reduced cost per unit than you would pay in most other grocery stores.

https://www.frugalrules.com/costco-vs-sams-club-comparison/

Additionally, both grocery stores have signature brands of home goods and other products that have been praised and are regarded as high-quality.

When choosing between Costco and Sam’s Club, many factors may be helpful to keep in mind. 

Costco vs. Sam’s Club | Membership Costs

Sam’s Club and Costco are unique from many other grocery stores in that they both require a membership to access most of their deals.

Membership fees are charged annually for both stores. Overall, membership at Sam’s Club costs less and comes with more rewards.

Membership at Sam’s Club

There are two options for membership at Sam’s Club, called the Club Membership and the Plus Membership.

Club MembershipThe least expensive option. It costs $45 per year, and comes with many benefits, including the following: A Sam’s Club Mastercard that gives money back on select purchases up to $5,000 total. Free select auto services. Member-only pricing and discounts, including for fuel services.  
Plus MembershipIf you’d like to upgrade your savings even further, the Plus Membership costs $110 per year. It allows buyers all of the benefits that come with the Club Membership option, with the following extra additions: Free online shipping Early shopping hours Discounts on prescriptions and eyeglasses Cash rewards up to $500 annually  

Even if you are not willing to pay for an annual membership, Sam’s Club allows for a 90-day free trial and also gives discounts for students and those in the military. 

Membership at Costco 

Like Sam’s Club, there are also two main membership options available at Costco. They are called the Gold Star Membership and the Gold Star Executive Membership.

Gold Star MembershipThe Gold Star Membership is considered the basic membership package and costs $60 per year. The main benefits of the Gold Star Membership include discounts on Costco merchandise and reduced fuel prices.  
Gold Star Executive MembershipThe Gold Star Executive Membership is very similar to the Gold Star package but offers additional discounts as well as an annual 2% reward on your total yearly purchases.   

Costco also offers memberships specifically for businesses that allow businesses to purchase goods for resale.

The pricing for business memberships is very similar to those of regular memberships, making Costco an affordable option for businesses looking to purchase bulk goods.

The Price of Groceries at Costco and Sam’s Club

Many people choose to shop at Costco and Sam’s for food and other groceries, and so you may be wondering if there is any distinct difference between the cost of groceries at either store.

Overall, Sam’s Club and Costco have very similarly priced groceries, with Costco being slightly cheaper overall.

However, there are some key differences in what products they offer and how many different products they sell.

Organics

Both Sam’s Club and Costco have a selection of organic foods. However, Costco is known to have more organic food and other high-quality brands in its stores.

If you are a frequent buyer of organic groceries, Costco may be a better fit for you. 

Variety

Sam’s Club and Costco are both very large grocery stores that are filled with what seems like countless products. However, Sam’s Club is known to have more variety than Costco.

Sam’s Club has over 8,000 distinctive products in its catalog. By comparison, Costco has around 4,000.

If you are a shopper who values variety, then Sam’s Club may work well for your lifestyle.

Buying Home Goods and Clothing at Costco vs. Sam’s Club

Sam’s Club and Costco both sell quality clothing and home goods at their store under their own respective brands.

Although there is no clear winner in this category, Costco’s brand, Kirkland Signature, has a strong reputation for high-quality products in a variety of areas.

Costco: Kirkland Signature

Costco’s brand sells a variety of things, including the following:

  • Housewares such as towels and blankets
  • Clothing
  • Home and kitchenware
  • Office products
  • Health and Beauty
  • Hardware

Even with such a wide variety of products, Kirkland Signature is known for its quality and has often been listed as a top private-label brand. As a private-label brand, it also offers products at a lower price than name brands, meaning that you can buy high-quality products while still saving money.

If you find that you enjoy the Kirkland Signature brand, Costco may be a good fit for you with its consistent guarantee of quality across a range of products.

Sam’s Club: Maker’s Mark

Sam’s Club’s private-label brand is called Maker’s Mark, and they offer products in many categories that are the same as or similar to Kirkland Originals.

While Maker’s Mark also offers good-quality products at a discount, they are less of a central part of the store than Costco’s brand is.

Sam’s Club offers numerous name brands in addition to its private-label brand, so you may not encounter Maker’s Mark products at Sam’s Club as often as you would find Kirkland Signature products at Costco.

Does Sam’s Club or Costco Have a Better Return Policy?

No matter how much you may research your products, there inevitably comes a time when something needs to be returned. Fortunately, both Sam’s Club and Costco have very generous return policies, ensuring that you will not lose money if a product doesn’t work for you.

Returning Products at Costco

Almost anything that you purchase at Costco can be returned. The following are some features of their return policy.

  • Extended warranties on large appliances
  • A 90-day timeframe to return electronics
  • Full return on membership fees if you are unsatisfied with your Costco membership

The return process at Costco is simple and stress-free, both in-person and online.

Returning Products at Sam’s Club

Similarly, most Sam’s Club purchases can be returned, too. Their return policy has the following features:

  • Returns on everything except alcohol, tobacco, and contact lenses
  • The ability to return all items at any time
  • Products can be brought or shipped to any Sam’s Club location to make a return

Online returns also are straightforward with Sam’s Club and while a receipt is preferred to make returns, it is not required.

Costco vs. Sam’s Club | Other Considerations

There are a few more things that can impact your decision to shop at Sam’s Club or Costco.

Locations

Both stores have more than 500 locations across the United States. Check to see which retailer is closest to you, as this can save you money on transportation costs.

Credit Card Policy

While Sam’s Club accepts almost all types of credit cards, Costco only accepts Visa cards. Both stores have their own credit cards and accept debit, check, and credit.

However, Costco’s strict credit card policy may pose an issue if you are hoping to pay with a certain type of card.

Conclusion

When choosing between Sam’s Club and Costco, there is no way you can go wrong. Both stores offer savings and rewards associated with a membership that can add up and make a big difference in reducing your shopping bill. 

While shopping at Sam’s Club will give you a lot of variety in products and a cheaper cost of membership, Costco has its advantages when it comes to organic foods and the quality of its private-label brand. 

Deciding which store will help you save more ultimately comes down to your lifestyle. Thinking through your preferences on variety, product types, and membership perks will help you choose a store that works best for your shopping habits.

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