What are Sinking Funds?

Sinking fund: is a fund that contains money set aside to be saved to pay off a debt or to soften a hardship of an unexpected large expense.

Sinking funds are meant to have you prepare for the future. Future costs that you expect are coming ( Ex. Christmas gifts, vacations, dining out, weddings, self-employed taxes etc.) or for costs that are unexpected (ex. car-related expenses, medical expenses etc.)

“Sinking funds is telling your money where to go rather than wondering where it went.”

This video showcases the breakdown of what a monthly deposit into sinking funds looks like.

For more details on how to determine how much/how often you should add into your sinking funds check out the this post HERE.