Understanding Sinking Funds for Better Budgeting
A sinking fund is a cash reserve in your account that holds calculated funds for future expenses. This is different than an emergency fund!
Purpose of a Sinking Fund
he purpose of a sinking fund is to have enough liquid cash savings to cover anticipated expenses. A sinking fund supports costs related to life events and assets.
Sinking Fund Categories
Sinking fund categories help organize savings and promote responsible spending when needed.
Examples of Categories:
- Medical -Car Care -Home Fund
-Figure out how much is needed -Choose where to save funds -Determine how to save -
Setting Up a Sinking Fund
It’s your responsibility to cover these events, and the only way to safeguard your finances is through a properly established sinking fund.
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