Control planned expenses with sinking funds
In any given year, you probably have expenses you know are coming – holiday gifts, the family vacation you take every summer, annual homeowners association fees, or perhaps home renewals. membership. But just because these costs are predictable doesn’t mean you’re always prepared.
If you’re dipping into your emergency fund or using a credit card to cover foreseeable costs, you might consider using one or more “sinking funds.” A sinking fund is a savings account dedicated to a particular expense that you fund gradually through regular payments. Sinking funds often have a maturity date, but not always.