How I’m Using a Sinking Fund System to Avoid Panic Purchases

By Beelinger Staff
Estimated read time: 5 minutes

Let me paint the picture: My car registration was due. Again. $347—due next week. And I hadn’t saved a penny for it.

So what did I do? Raided my emergency fund (again), sighed dramatically, and promised myself I’d be “more prepared next year.”

Well, I finally kept that promise. I built my first set of sinking funds—and I haven’t had a surprise bill knock me off track since.

What’s a Sinking Fund?

A sinking fund is a savings category for a known expense you plan for ahead of time. It’s not an emergency fund. It’s a “we know this is coming” fund.

For example, I now have sinking funds for:

• 🚗 Car maintenance & registration
• 🎁 Holiday gifts
• 👩‍⚕️ Medical bills & prescriptions
• 🛠️ Home repairs
• 🐶 Vet visits

How I Set It Up

I created labeled folders using Capital One 360 Performance Savings (they let you open multiple sub-accounts—free).

Then I looked at how much I’d need for each fund and divided by 12 months. Here’s what that looked like:

• Car registration: $360 ÷ 12 = $30/month
• Vet fund: $500 ÷ 12 = ~$42/month
• Christmas: $600 ÷ 12 = $50/month

Now, each month I auto-transfer those amounts into each folder. I don’t feel them leaving my account—but I definitely feel it when they’re there, ready to save me.

The Panic Is Gone

Since setting up sinking funds, I’ve avoided:

• Putting a vet bill on a credit card
• Wiping out my emergency fund for car tires
• Skipping birthday gifts because I forgot t
  
  

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