What is a Sinking Fund?
Sinking funds are a set amount you save every month for non-monthly expenses like car repairs, maintenance of your home, or twice-yearly insurance payments.
Side note: Sinking Fund could also be an excellent name for boat. I would add that this is a Wish Farm goal.)
I am sure the car will require repairs eventually. All of us know that. It’s a fact that we all accept.
What will the cost of these repairs be? How much will these repairs cost?
Our life insurance premiums must be paid annually. It’s a known expense. What will be the cost of premiums? Our term insurance is locked in for a minimum of ten years and costs $840 a year.
You can also use sinking funds to pay for medical expenses, holidays, birthdays or Christmas presents, weddings or other expenses. Or, you can even purchase an annual subscription, such as Amazon Prime, in order to build an emergency fund. These are not eligible. Unexpected expenses can still feel like that when they come up again.
List of other Sinking fund categories You might want to include this in your budget.