When I started this, I kept seeing “sinking funds” everywhere. Y’all, I was so confused! I had no idea what they were or why they were so important. So I did some research.

Sinking funds are specific items you know come up within the year, but aren’t a monthly payment. For example, Christmas, birthdays, car registration, etc. These are things you still have to pay for, just not monthly.

I thought about what things were important and that I knew I needed to pay for within the next year. I came up with Christmas (next year), truck registration, birthdays and truck maintenance (oil changes, etc.).

I then decided how much each category needed. We put a $500 cap on Christmas this year and I feel like that’s plenty for next year too. I allotted $100 per person for birthdays. Truck tags and maintenance are estimated at $180 for now. So then I divided that by 12 so I knew how much each month I needed to put into this account.

I have one savings account, separate from our emergency fund, that will hold our sinking funds and it will always have a rolling balance! It’s such a great feeling knowing I won’t have to short pay any bills in order to get the oil changed on the truck! We won’t have to worry about extra paychecks coming in to be able to pay for birthdays or Christmas!

Compared to some, I have a short list. Once we are out of debt, there will probably be more categories. This is also the first year we are doing this, so as things come, we may have to readjust our funds to better fit our needs. At some point I will be getting a car again so we will have to factor in those costs.

In the future I want to add a vacation, anniversary and annual insurance sinking funds. Right now it doesn’t save us any money to pay our insurance in full, so I still have it as a monthly bill. One of my financial goals is to be able to take a yearly vacation somewhere that isn’t just with family. And my anniversary is 4 days before Valentines Day, so we combine the two, so it would be nice to plan something fun for that!

I highly recommend starting sinking funds for things that are important to you!