Sinking fund
Money saved monthly for a cost you know is coming but that does not arrive monthly.
Insurance renewals, car servicing, replacing a laptop, Christmas. None of these are surprises — they are simply irregular, so they never appear as a monthly line and each one lands as a shock.
The method: total them for the year, divide by twelve, save that amount monthly in an account separate from your emergency fund.
The total is usually larger than people expect, which is the useful part. It is not new spending; it is spending you were already doing, finally visible.
Keeping it separate from the emergency fund matters. Share one pot and the emergency fund is permanently half-spent, and you never know which part of the balance is genuinely available.
Words on this page
- Emergency fund — Cash set aside to cover unexpected, necessary and urgent costs, so they do not become debt.
- Share — A small piece of ownership in a company, including a claim on its profits.
Related terms
Covered properly in Learn.