Sinking Funds 101

With the new year coming soon, many people make resolutions. While these can be related to anything, it can be wise to prioritize getting a hold of your finances at this point. I do this by utilizing sinking funds.

What is a Sinking Fund?

Think of a sinking fund as a mini savings account. It’s a category that you put money aside to every month and use when you need it. They are made for predictable expenses. These can be things that you know specifically when they come, to things that are bound to happen but when is unpredictable.

How do they get Funded?

Try and estimate the amount you will spend each year for the ones whoe dates you can expect. Then take this number and divide it by the amount of paychecks that you have before the event. For example, if you normally spend $100 on valentines day, and its 10 paychecks away, you would put aside $10 per paycheck.

For the ones whose dates you cant predict, try and put aside what you can each month. Even if the amount ends up being too small when the event pops up, having at least a little put aside is better than nothing.


Im going to share some of the most popular sinkinh funds categories now. Some predicatable dated ones are things like Christmas, your anniversay, birthdays, etc.

Some that are non predictable are things like car repairs, health expenses, pet expenses, etc.

What I Have

I have quite a few sinking funds right now. Mine are personal but hopefully they can help you get some ideas about categories for you. Mine are:

  • Hayes (my cat)
    • This one is used for toys, food, litter, and any potential vet expenses I may need to cover for Hayes.
  • Home Decor
    • I am a huge home decor person. I recently got my own apartment, and it still needs a bit of decor work. I put aside this money so that when I find things I like I can afford to purchase them.
  • Clothes
    • This used to be a continuous monthly expense for me, but I realized I was overspending and buying things I completely did not need. I decided that Id do only one or two shopping trips a season, to stock up on what I actually need.
  • AU and SP spending
    • This one is not something many people do. I only really put money towards this in the summer. I allocate myself $50 per week in spending money. It keeps me from worrying about money through the semester, and allows me to work less.
  • Gifts
    • This one is pretty straight forward. This is money that I use to purchase birthday and Christmas gifts.
  • Travel
    • I don’t do much travel on my own, so this isn’t really for plane tickets or hotel rooms. This is mostly used for purchasing souvenirs and spending on things in the location. I use this towards eating out and stuff like that while I travel as well.
  • Uber/Lyft
    • I put a super small amount in here each month, because it’s not a constant, but it is something that I am bound to use. I have my own car on campus so this is really only used for when I can’t park or parking is more expensive then the uber. Honestly, most of this is used to uber from my apartment to the sorority house at night or when it’s cold/raining because its a 25 minute walk.
  • Little
    • This one is only going to last for a few more months. I’m in a sorority and I will be getting a little in a few months. We give our littles baskets of gifts for three days leading up to big/little reveal. This money will be used towards these gifts and then I will be done.

How to Store the Money

The most common way people store money for sinking funds is in cash. It can be kept in lock boxes, envelopes or a variety of other ways. For those who are wary about keeping cash around, there are other ways to go about it.

Personally, I use a savings account.

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