THIS POST BREAKS DOWN HOW TO CALCULATE SINKING FUNDS TO PAY FOR FUTURE EXPENSES. KEEP READING TO DOWNLOAD A FREE PRINTABLE TRACKER.
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Let’s talk about that time a sinking fund saved my life.
Picture it: North Carolina. April 2016 A.D.
I opened my bill for the 6-month car insurance premium and got hella sticker shock. ✉️😱
I thought, “Lawd, not another thing. I really don’t wanna touch my opportunity fund (read: emergency fund) for this. Guess I’ll do some more freelance writing gigs.”
Then it dawned on me that I had already saved this money. I smooth forgot that I started saving about $40 each payday in an online account (completely separate from my regular checking account) months ago. I went from PANIC to PEACE in about 5 minutes. 😩➡️😊
This was one of my very first sinking funds, but I didn’t even know what to call it then.
I was living paycheck-to-paycheck. A large bill—unexpected or expected—would have caused a panic attack and definitely another dip in debt. I probably would’ve put that bill on a credit card had it not been for the sinking fund. Who knows how long it would’ve taken me to pay off.
I want you to experience the same peace I did in April 2016. So let’s set up your sinking funds!
What is a sinking fund?
A sinking fund is a fund made for saving small amounts of money over time to cover an expense, often large and expected, in the future. A sinking fund allows you to save to spend. It’s what I created for my car insurance premium. I set up a Capital One 360 account and put about $40 in it each pay period until I had the full payment.
Isn’t this the same as an emergency fund? Not really.