Budgeting, Money Mindset

The Best Way To Set Up Sinking Funds

Years ago, shortly after my divorce, my van kept breaking down. Fortunately, I had the saved the money to fix it, but I knew I was going to have to start saving for a new car. I started a “Sinking Fund” so that when it came time to purchase, I could buy it out right or have a good amount to put down on the car. I started to “pretend” I already had a car payment and put that money away each month. When the time came to get a new car, I was ready. I didn’t have quite enough to buy it in cash, but I had a good down payment and I was used to a “car payment” again. This sinking fund not only prepared me, but without it, I would have had a higher payment and not been able to pay it off as quickly.

Big Expenses Can be Overwhelming

  • Sometimes when we are budgeting we forget about expenses that may come up in the future. For example, you might need a new car (like in my situation). If you’re not putting money away each month, anticipating that big expense, it might overwhelm you when it hits. Sinking funds are a way to prepare yourself for those items, so that is is no problem when they come up….the money is waiting for you.

Why Do Big Expenses Sometimes Hit Us Hard

  • Sometimes we just don’t think about a big expense that’s coming down the road.
  • Sometimes we want to ignore that a big expense that may be coming. Like a new car, college expenses, car tags, vacations.
  • Sometimes we think we’ll figure it out when we get there.
  • The thought of saving seems overwhelming

The best product to Track Your Sinking Funds

  • The saying goes “Fail to plan. Plan to fail.” So, we need to plan, even if it’s overwhelming at first.
  • First, list all your sinking funds that apply to you.
  • You can write your sinking funds out on your own or you can get this cute printable from my shop below. This way you can print out and use it over and over again as your goals are met and change. You can also add this to your Budget Binder.
Downloadable PDF’s

Sinking and Emergency Fund Trackers

You will receive 2 different trackers/worksheets. They are inexpensive and you can print as many as you would like.

Common Questions / Frequently Asked Questions about Sinking Funds

  • Figure out what you are saving for and how much you will need
  • Write down how long you want to take to save or this item?
  • Decided where you will put the money (savings account, cash?)
  • Figure out how to work your sinking fund into your current budget.

In a savings account or if you are doing a cash system, pull the money out each month and put it away.

There are main categories and subcategories. You can go to this blog post here. You will see a list of over 100 sinking fund ideas. Not all will apply to you, but write down the ones that do.

The last thing you need to know about Sinking Funds

  • Where is your money going next? To a car, vacation, Christmas money? Sinking funds is just one of the many ways to help you prepare for the future. Once start saving towards your goals, it can be exciting to see that money grow.
  • If you want to check out more printable in our shop or start your own Budget Planner/Binder, click HERE.

Spread the word!

Leave a Reply