WHAT ARE SINKING FUNDS:
BUDGET YOUR SINKING FUNDS:
I wasn’t sure where to start. So I just followed the equation on how to budget for sinking funds anyway. Take a bill that doesn’t come as frequently as monthly… so not your electric bill or your cable bill (unless those things aren’t monthly) but like your amazon prime membership or your house insurance or Christmas. Christmas is a good example (if you celebrate it and buy gifts for people). Christmas happens every December 25th — EVERY. SINGLE. YEAR. And yet most people begin their shopping for Christmas on Black Friday and for a whole month they put everything on a credit card because they “have no money” but just HAVE to buy people presents. BUT! If you know it’s coming, and you know you’ll need to spend money on it, why not set it aside so you DON’T charge it?
That’s the amount you set aside each month.
If you want $1,000 by December 25th and it’s January you need to set aside $100 per month into a sinking fund. If you want $1,000 by December 25th and it’s June you’ll need to set aside (about) $167 per month.