Tips to Starting a Sinking Fund

Sinking funds are a smart way to save money. Every year we always face expenses such as holiday shopping or going on a trip or saving to buy a house. Sinking funds allow for you to save your money over a set amount of time.


Q: Should you have a sinking fund(s)?
A: Yes, you can remove stress from your life by planning
out your expenses ahead of time.

Set a Goal

Sinking funds are surrounded by goals or aspirations that you have for your future. Sinking funds is a great way to help you accomplish your goals. 

For example, I want to take a family trip to Disney World for myself and the husband.

Creating a sinking fund can help me to reach this goal without scrambling for money at the last minute. 

Create a timeline to reach goal

After setting a goal, a timeline needs to be defined. A timeline is important to understanding how much money you need to set aside each month but in order to do this you need to ask yourself a few questions.

✔️How much is a flight to Disney World for 2 people?
✔️How much is 2 tickets to Disney world?
✔️How much is a hotel in Orlando?
✔️How much money will you need to eat & shopping?
✔️When would you like to go?

So let say the answers are as follow:
✔️How much is a flight to Disney World for 2 people? $600
✔️How much is 2 tickets to Disney world? $500
✔️How much is a hotel in Orlando? $600
✔️How much money will you need to eat & shopping? $700 
✔️When would you like to go? In 18 months

This tells me that I have 18 months to save roughly $2,400.

Auto deposit $ into sinking fund account

If you do not already have aa savings account that is separate from your checking account, then create one. Separating your money accomplishes a couple things. 

​✖️Removes the temptation to spend that money 
✖️Allows you take advantage of being paid out at a higher rate by utilizing a high interest savings account

Sinking funds are one of your greatest weapons. Let me know what you plan on savings for? Maybe a trip to Jamaica once the world opens up?