Savings strategies that actually work

In a conversation about budgeting, certified financial planner Tanya P. Brown told Life Kit host Mariel Segara that the best money choice isn't necessarily the one that optimizes your savings. She uses the acronym SWAN — sleep well at night — to guide her advice. The conversation centers on a strategy called savings buckets: separating money into distinct categories, prioritizing between them, and setting rules for when to tap each one. This approach is designed to keep people motivated and on track with their goals without requiring perfect optimization.

Sinking funds come first

Brown argues that the most important savings bucket is what financial experts call a sinking fund. This is money set aside for expenses you know are coming: new tires, a vacation, Christmas gifts, an expensive medical procedure. The purpose is to turn what feels like a panic moment into something smooth and automated. "If you know this comes up regularly, you can simply have a line item in your budget," she says. "A hundred of that thousand dollars may go towards a Christmas budget. A hundred may go towards a future repair or future dental."