What You Need to Know About a Sinking Fund

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

This strategy helps those who want to manage their finances better and gain peace of mind.

Sinking funds can be a game changer for individuals and households.

Americans have been saving more, as illustrated by the US personal savings rate of 14.9% for May 2021.

The timing for setting up sinking funds could not be better.

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

What is a Sinking Fund?

you can create a sinking fund, dedicating a savings account for a specific expense that may be too large to handle without borrowing the money.

A Sinking Fund for Your Household

An emergency fund is for the money you set aside for unexpected costs.

Sinking Fund Vs.  Emergency Fund

The sinking fund is for saving money for a known purpose.

Alternatively, you can be more specific:

You can have a sinking fund by categories.

Kitchen remodeling


Flat-screen TV


Car maintenance