Sinking funds: Start Today with These 5 Steps

It’s not necessarily the amount of money you make that makes you happy. Instead, it’s your bank balance. It’s the amount of money you have available, that really matters.

In this blog post, we are going to talk about sinking funds, sinking funds categories, and how to get started. Let’s go!

What is a sinking fund?

The name sinking fund originated as a fund that was set aside by companies to pay off a debt or bond. It was intended to soften the hardship of paying a large amount of revenue at any given time.

What is the difference between a sinking fund versus emergency fund?

Yes. A sinking fund is not an emergency fund. An emergency fund is used to fund unexpected costs that you didn’t plan for. For example, losing your job or being hospitalized.

Do I need a sinking fund?

If you don’t have a sinking fund, you may find yourself using credit cards or dipping into the emergency fund. Sinking funds will ensure you stay on track with your money goals.

What are sinking fund categories?

You can turn anything you want to spend money on in the future into a sinking fund. Some categories below will apply to you, while others won’t. Don’t worry. There’s no right or wrong way to sinking funds.

How much should I save in a sinking fund?

If you know how much something is going to cost and when you want to have it, well, just divide the total cost by the time, and that’s how much you need to save every month.

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