Heres Everything You Need To Know About a Sinking Fund

Paying for these significant expenses can be challenging, but a sinking fund may pave a better way.

We all have something special we’d like to buy for our home or in life.

Sinking funds can be a game changer for individuals and households. It is a valuable tool to add to your financial toolbox for savings.

So why not make your savings work better for you?

What Is A Sinking Fund?

Sinking funds have long been helpful for companies and bondholders to minimize risk.

Many bonds now have a sinking fund managed by a trustee who oversees the fund.

Money is set aside periodically with a trustee for repayment of the portion of the principal.

A Sinking Fund For Your Household

Similarly, you or someone in your family can create a sinking fund, dedicating a savings account for a specific household expense.

With a bit of planning, you can have what you need or want in your life without guilt.

For example, if you have your heart on a particular $1,500 couch within a year, your monthly savings goal is to contribute $125 to the sinking fund each month.

Sinking Fund Vs. Emergency Fund

Both your sinking fund and emergency fund are safety nets but for different purposes.

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