Saving for Large Expenses, a Little Bit at a Time

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Sinking Fund: n. a fund formed by periodically setting aside money for the gradual repayment of a debt or replacement of a wasting asset.

Sinking funds are a great way to save for expenses that don’t occur every month, but you know will occur sometime in the future. By saving over time, you’re less likely to need to use a credit card when they come up.

There are two ways to determine how much you should save for each sinking fund.


You save the expected cost of the expense, divided by the number of months you have until you need the cash. This way you know the expense will be covered.

Cost  /  Months Left = Monthly Savings

The only issue with this method is that many people will struggle to save enough to meet all of their sinking fund goals. If this happens to you, prioritize your goals and allocate your savings to the most important sinking fund first.

Save what you can

Save as much as you can even if it's a few bucks. Assign a percentage of your savings contributions to your sinking funds. For example, if you save $100/month, and want to allocate 20% to a home down payment sinking fund, $20 would be allocated.

You don't need a separate account for each sinking fund, just one savings account and a method of tracking the allocation to each expense within that account. A table like the one below can be used to track your sinking funds and can be made in a spreadsheet or on paper.

Sinking funds are a smart way to save for large expenses. Having money set aside will bring peace of mind when faced with a large bill.

So, what should a sinking fund be used for? Here are some examples:


  • HOA Dues    
  • Septic Tank Flush        
  • Appliances      
  • Property Taxes          
  • Home Repairs      
  • Down Payment
  • Lawn Treatment
  • Insurance

Pets, Kids, & Personal

  • Pet Medical Expenses
  • Sports
  • Camps
  • Clothing
  • Medical Expenses
  • Back to School Shopping

Fun Money

  • Concerts
  • Vacations
  • Night Out


  • Weddings
  • Quinceaneras
  • Bar/Bat Mitzvah


  • Birthdays
  • Christmas
  • Graduations
  • Weddings
  • Special Occasions
  • Anniversary


  • Auto Repairs
  • DMV Fees
  • Car Replacement
  • Insurance

Hill and Valley

Hill and Valley Funding is for people with highly variable income to cover their expenses in periods of lower income.