What Are Sinking Funds?
A sinking fund is money you set aside each month for expenses that don't happen monthly but will definitely happen. Instead of scrambling to find $600 when your car insurance bill arrives, you've been putting aside $50 a month. When the bill comes, the money is already there.
It's a simple concept, but it transforms how you experience irregular expenses. They stop being surprises that blow up your budget and become just another planned expense.
Common Sinking Fund Categories
Think about everything that happens less than monthly but more than rarely. Car maintenance and registration. Medical copays if you have regular appointments. Holiday and birthday gifts. Travel. Annual subscriptions and memberships. Home repairs.
Some people have just a few sinking funds. Others have a dozen. The right number is however many you need to stop getting caught off guard by predictable expenses.
Setting Up Your Sinking Funds
Start by listing all your irregular expenses from the past year. Then calculate how much you need to save monthly for each:
- Annual expense divided by 12 equals monthly contribution
- Keep sinking funds in a separate savings account if possible
- Automate the transfers so you don't have to think about it
- Review and adjust as you learn your actual spending patterns
Some people track sinking funds in spreadsheets. Some use separate accounts. The method matters less than actually doing it.
Track Your Progress
Spendify can help you monitor your sinking fund balances and track progress toward your targets. Watching those funds grow feels good, and spending from them when the expense arrives feels even better.
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