A sinking fund is a way to save money for specific planned expenses, such as car repairs or gifts, by setting aside a little each month until the goal is reached. This method prevents straining your budget with large purchases all at once[2][6]. Unlike an emergency fund, which is for unexpected costs like medical bills or car breakdowns, sinking funds focus on predictable yet irregular expenses[1][5].
To set up a sinking fund without a spreadsheet, consider opening separate savings accounts for each goal or using labeled buckets in a single account. This way, you can easily track how much you have saved for each predictable expense[5][6].
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