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Budgeting & Saving

How to use sinking funds for big purchases

Avoid debt on big expenses by saving a little each month. Learn how to set up sinking funds and track them easily.

What is a sinking fund?

A dedicated mini‑savings for a known future expense (car repairs, travel, gifts).

Setup

  1. Pick the expense and target date.
  2. Divide cost by months left = monthly amount.
  3. Create separate sub‑accounts or labeled trackers.

Examples

  • Car maintenance: $600/year → $50/month.
  • Travel: $2,400 in 12 months → $200/month.

Tips

  • Automate transfers.
  • Keep funds in high‑yield savings but separate from emergency fund.

Frequently Asked Questions

How many funds is too many?

3‑7 active funds is a sweet spot.

What if timing changes?

Recalculate monthly amount.

Can I borrow from one?

Only if you replenish next month.