4 Sinking Funds You Need

A sinking fund is simply saving up in advance for expenses that are inevitable. Often times we ignore upcoming expenses lead ourselves into a emergency. So, here are some sinking funds you need to think about.

1. Gifts – if you know anyone who is getting married anytime soon. If you celebrate Christmas or many other holidays you will need to buy gifts at some point. We like to keep a “Christmas” account funded with direct deposits throughout the year. We pull from it whenever we need to purchase a gift for any reason, but we use it mostly at the end of the year for Holiday spending and travel. It helps save our budget at the end of the year.

2. New Car – Your car is dying. Let’s face it. You are eventually going to need a new car. We have published another article on this topic specifically. You should always have a car payment. If you save up money as you are driving your current car into the ground you may have enough to pay cash or at least have a good down payment for your next car when you current one dies.
3. Phones – Our most cherished possessions and the bane of our existence when things go wrong. If you are like me every two years you want a new phone. I listen to a lot of tech podcasts and they are always talking about new phones. I also use ting.com so I have to pay off contract price for my phones, but pay much less for my service. If you like tech toys start putting money away not because your phone is dying faster than your car.
4. House Repairs – If you like it or not, you are going to need money to keep your home up and running. You should have an emergency fund for small things, but what about a new roof, or remodeling your house or larger items. You may need to repave the driveway or have a pipe burst in the laundry room. You could use your emergency fund for this, but that isn’t exactly what it is for. If you know it is coming it isn’t an emergency, it may just be something you didn’t plan for.

What are other sinking funds you plan for?

Image by Reinhard Jahn (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

3 Comments so far

KaraPosted on10:58 pm - Sep 6, 2015

I don’t care much about having the latest and greatest tech gadgets, so I don’t bother with the ‘phone’ sinking fund, but I’m on board with the rest. A few others we have: the plow fund, as living in New England, snow season can get pricey and it’s easier to save a small bit every month than to try to swallow that whole bill over 3 or 4 months time, and our medical/pet fund, where we use the money for unexpected medical expenses or unexpected vet care (outside of the usual pet maintenance like annual check ups and flea meds). We don’t know when the medical/pet fund will be needed, but many times it’s covered our behinds without having to touch the emergency fund. I try to save the EF for only ‘real’ emergencies.

JasonPosted on8:12 pm - Sep 7, 2015

Sure, not everyone needs the same ones, but with many carriers moving away from subsidized phones they are all going to be more expensive in the future even if you don’t want the top of the line phone.

Mitch RossPosted on6:54 am - Jun 15, 2016

I think #3 might be overblown but agree in principal. We also do special giving in addition to 1,2,&4

4 Sinking Funds You Need