Let me ask you something:
How many times this year have you been "surprised" by an expense you should've seen coming?
Your car needed new tires.
Your pet needed a vet visit.
Christmas "happened. "
And every single time, you called it an "emergency" and scrambled to find the money.
But here's the thing:
None of those things were real emergencies.
They were predictable.
You just didn't plan for them.
And that's the difference between being broke and being prepared.
So let me introduce you to your new favorite fund.
What's A Sinking Fund?
A sinking fund is just a fancy term for "saving small amounts over time for stuff you know is coming."
Instead of being blindsided by a $500 car repair, you save $50/month for car stuff.
So when the repair happens, you've got already got $600 sitting there ready to go.
It's not an emergency.
It's expected.
You planned for it.
Sinking funds turn "OH CRAP" moments into "yeah, I've got that covered" moments.
Why You Need Sinking Funds
Most people have two kinds of money:
- Money for bills and regular expenses (rent, groceries, utilities)
- Emergency fund (for real emergencies like job loss or medical stuff)
But there's a whole category of expenses that don't fit either bucket:
Things that happen regularly but not every month.
Car maintenance, annual renewals, birthdays, etc.
These aren't really life-or-death emergencies.
But if you're not saving for them, they FEEL like emergencies when they hit.
And when they feel like emergencies, you do what most people do:
You panic.
You put it on a credit card.
You dip into your emergency fund (which isn't really for this).
And you stress out.
Sinking funds fix this.
What To Create Sinking Funds For
Here are the most common sinking funds you should have:
Car maintenance/repairs: Tires, oil changes, unexpected repairs. Budget $50-$100/month depending on your car's age.
Medical/vet expenses: Co-pays, prescriptions, vet visits. Budget $30-$50/month.
Christmas/holidays: Gifts, decorations, travel, food. Budget $50-$150/month depending on how much you spend.
Birthdays: For everyone you buy gifts for throughout the year. Budget $20-$50/month.
Annual subscriptions: Costco membership, Amazon Prime, software renewals. Add them up and divide by 12.
Home maintenance: Appliances break. Stuff needs fixing. Budget $50-$100/month if you own a home.
Clothing/shoes: You're gonna need new clothes eventually. Budget $30-$50/month.
Irregular bills: Car registration, insurance (if you pay annually), property taxes. Divide the annual cost by 12.
Look, you obviously don't need all of these.
Pick the ones that apply to your life.
But whatever you pick, START SAVING FOR THEM NOW.
How To Set Up Sinking Funds
Option 1: Separate savings accounts
Some banks let you open multiple savings accounts for free. Create one for each sinking fund. Label them: "Car Fund," "Christmas Fund," "Vet Fund," etc.
Every month, transfer the budgeted amount into each account.
When the expense comes up, you've got the money sitting there.
Option 2: One savings account with a tracker
If your bank doesn't do multiple accounts, just use one savings account and track it in a spreadsheet or app.
Example:
- Car fund: $250
- Christmas fund: $300
- Vet fund: $100
- Total in savings: $650
When you need to pull from one fund, update your tracker so you know which "bucket" you're pulling from.
Option 3: Use a budgeting app
Apps like Dollarwise let you create virtual "envelopes" or categories for sinking funds.
You allocate money to each category, and the app tracks it for you.
(Obviously I'm partial to Dollarwise, but you do you.)
Pick whichever method works for you.
The system doesn't matter.
Actually DOING it matters.
How Much To Save
Start by adding up what you spent last year on irregular expenses.
Car repairs: $800 Christmas: $600 Birthdays: $300 Vet bills: $200 Annual subscriptions: $150 Total: $2,050
Divide by 12 months: $171/month.
That's how much you need to save every month to cover these expenses without panic.
If that feels like too much, pick the top 2-3 categories that stress you out the most and start there.
Even saving $50/month for car stuff is better than saving $0 and being screwed when something breaks.
What Happens When You Use Sinking Funds
Here's the beautiful part:
When your car needs $400 of work, you don't panic.
You just pull from your car fund.
No stress.
When Christmas comes around, you've got $600 saved.
You buy gifts without going into debt.
January arrives and you're not broke and regretful.
When a birthday pops up, you've got money set aside, and you're not choosing between buying a gift and paying your electric bill.
Sinking funds eliminate financial stress from predictable expenses.
You're not getting caught off guard or calling everything an "emergency."
You're just... prepared.
The Mindset Shift
The hardest part about sinking funds is the mindset shift.
You're gonna save $50/month for car stuff, and for months, nothing will happen.
That $50 will just sit there.
And your brain is gonna say "I could use that $50 right now for something fun."
Don't.
Because the SECOND you stop contributing to your sinking fund, your car is gonna break.
Murphy's Law, every time.
Sinking funds are insurance against your own life.
You pay a little every month so that when life happens (and it will), you're covered.
Bottom Line
Stop treating predictable expenses like emergencies.
Christmas happens every year.
Your car will need maintenance.
Birthdays exist.
None of this should be a surprise.
Set up sinking funds.
Save small amounts every month.
And when these expenses hit, you'll be ready.
That's the difference between constantly scrambling and actually having your shit together.
If you want help setting up and tracking sinking funds automatically, Dollarwise makes it easy to allocate money into different categories and see exactly how much you've saved for each thing.
Click here to start your trial and stop calling everything an emergency.
You got this, Pookie.
Taquitos,
Caleb "Be Prepared" Hammer
P.S. Once you set up sinking funds and actually USE them for the first time, it's a game changer.
The stress you've been carrying around about money?
It just... disappears.
Because you planned ahead.
That feeling is worth way more than the $50/month you're saving.
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