BeckyEver heard of a sinking fund? Sinking funds are a form of a savings account, but for building up money for future expenses or purchases. These expenses are not necessarily monthly, but when they do occur you won’t be scrambling to find that chunk of money in your budget.
My husband and I have used sinking funds for quite some time. The 2 categories that we’ve focused on the most in regard to sinking funds are for car maintenance and celebrations (birthdays, weddings, baptisms, etc).
It’s really come in handy for car oil changes. We put $100 in an envelope every month and when either of our cars need an oil change, new brake pads or what have you, we can pull out that envelope and use what’s been saved up over the past few months. We usually don’t use the full amount in the envelope and then we continue saving for the next car oil change or repair.
The same goes for our celebrations fund. As our family has grown with more nieces and nephews and sisters and brothers-in-law, we started noticing how last minute we’d have birthday dinners to attend or kids’ birthday parties to go to and we wouldn’t account for the cost of a birthday gift or a future wedding gift after rsvp’ing months in advance. Now we put $100 in our celebrations fund each month and we can plan ahead for birthdays or any other events occurring in the month.
More recently, we’ve discussed adding other sinking funds to help lessen the burden of future expenses. We’re going to add the 5 following sinking funds to our already existing ones, but you can also start sinking funds for back-to-school expenses, medical, vacation, family photos, annual renewals, self-care and more!
Clothing-most of us don’t need new clothing every month, but when it does come up it’s nice to have money to buy a new blouse or a pair of shoes. By saving a little money each month, you’ll be ready for when clothing wears out and you can replace clothing items with higher quality items next time around.
Pets-We have 2 kitties in our household and while we don’t have to buy them food and litter monthly, it’s nice to have a buffer for the months we do have to buy more cat food, cat litter or their annual vaccines. Heaven forbid we ever have an emergency pet visit, we’d have money piled away. I also have a real hunger for a good deal so if Petsmart or Petco have a sale for say, $10 off when you spend $40, I can use the money in our growing pets sinking fund to stock up on cat food or litter or buy them some new toys or treats!
Christmas-this is a GREAT sinking fund to initiate! If November/December rolls around every year and you’re surprised and hustling to come up with money for Christmas gifts, a sinking fund for this category will be your best friend! Decide how much you want to spend on gifts for Christmas this year and divide it by the number of months left until Christmas. By the time December rolls around, you’ll have a nice stash of cash you can use.
Home Projects-since buying our home in the summer of 2020, we’ve had our fair share of home repairs. Anything from our HVAC going out on one of the hottest days this past summer to replacing our sink faucet. We reevaluated this year and decided we’re going to set up a sinking fund for home repairs to save us the trouble of further emergencies.
Date night-this category is another new one for us. Since having our little guy this past year, date nights have become a MUST for us. Finding time for us to reconnect and be the two of us again without our kid around, has been a saving grace for our marriage. While date nights should be a priority for most couples, it tends to eat into the budget. By the time dinner or a movie is over, $30+ is already out the window! Save yourself the trouble of trying to budget while spending time with your spouse and start a sinking fund for date night.
