Sinking funds CHANGED my budget. These are all of the non-monthly expenses that you tend to forget about, but are a huge part of your budget. Think: car repairs, Amazon Prime, and Christmas.
The goal is to treat these expenses as if they were monthly expenses and set aside money EVERY MONTH so that you are armed with the cash when the time comes to spend it.
Below are the 10 sinking funds you need to add to your budget, in order to get out and stay out of debt.
Donations
Part of budgeting that is AWESOME is that you can afford to donate to the causes that mean the most to you.
Black Lives Matter, random acts of kindness, GoFundMe’s, annual donations, etc. This sinking fund is great for all of those things! Now you can help out when it is needed most because you already have that money set aside.
After adding this to your budget, please consider donating to these BLM funds:
Technology
Life runs on technology. Most of us have a smart phone, computer or laptop, multiple TVs, and maybe even a smart watch. The reality is that these things break (pretty easily) and are NOT cheap to replace.
Why not be financially prepared to buy a new phone, computer, or TV? You know that day is coming…?
Car Maintenance and Repairs
Oil changes? Snow tires coming up in December? Transmission broke? Battery dead?
These are all expenses that are inevitable with a car, yet somehow many of us are SHOCKED when it happens. Start a car sinking fund today, and you’ll have one less thing to worry about when it comes time to fork over cash for car repairs.
Holidays
This is my favorite and original sinking fund. When I first heard about saving for Christmas throughout the year my mind was BLOWN. It seems so obvious now, but before sinking funds I would try to fully fund Christmas with the one or two paychecks in December.
Now, it’s June and because I set aside a little each month, my Christmas fund is already taken care of!
Save yourself the stress and temptation to use a credit card for gifts you can’t afford this year, and start saving for Christmas NOW!
Pets
There are lots of frequent expenses that come with having pets (food, medication, toys, etc), but what about those larger typically unexpected expenses?
I got pet insurance for both of my cats because I knew I never wanted to be torn between their health and money. Even with insurance, there is still times where I have to pay more than expected in order to take care of them.
You don’t want to have to worry about money when you’re also worrying about your pet. Eliminate some of that stress, and start a sinking fund for your pets so you are prepared for those larger, less frequent vet bills.
Medical
Unfortunately, with our healthcare system in the U.S., there are so many cases of people going into major debt due to medical expenses. It’s heartbreaking, and no one can prepare for some of those astronomical 5-6 figure medical bills.
But what you can do is prepare for some of those smaller bills that may come up. Even with insurance, there are copays and you may find yourself in a position that you need to pay way more than you were expecting.
Again, you don’t need money stress when you are also worried about health. Just set aside some every month in preparation for unexpected medical bills.
Birthdays
This is a great little fund to have set aside for those “oh sh*t” moments where you’ve completely forgotten someone’s birthday. If you set aside money for both the small and large birthday expenses that are truly inevitable, you’ll have the funds there to pay for gifts!
Vacation
Trust me, vacations feel so much better when you don’t have to put them on a credit card. Start saving NOW for the vacation you want to take. It’s so nice to know that you can afford that trip.
You deserve it!
Pro tip: save 10% more than you expect the trip will cost. You will need it. sh*t happens, you get lost, things cost more than you expect.
Annual Subscriptions
Two words: Amazon. Prime.
I forget about this EVERY YEAR.
But now, I have a sinking fund in place where I put aside money monthly to pay for my annual Prime membership.
There are tons of other annual expenses that this applies to: credit card fees, car tag renewal, FabFitFun, etc.
Treat Yo’ Self
This one is SO important. Budgeting only works if you stick to it, and in my mind, you’re only going to stick to budgeting for the long haul if you don’t feel restricted.
You are going to want to splurge on yourself and you DESERVE to do this!
Instead of having to move tons of things around in your budget when you find that bigger ticket item/experience you want, start setting aside some money now.
Use this sinking fund for bigger items rather than consistently dipping into it, that way it builds up without you really even noticing!
There we go!
Those are 10 sinking funds that I believe are crucial in almost every budget.
I have all 10 of these in my budget and they have saved me from racking up debt numerous times.
What are your favorite/most important sinking funds?
