Financial literacy guide

Sinking funds for planned future expenses

A sinking fund is money set aside gradually for a known or likely future cost.

SavingPlanned expense

Editorial review: August 11, 2026 · Lauren M. Whitfield

Choose a specific purpose

Examples include annual insurance, school costs, travel, repairs or replacing an appliance.

Use a target and date

Dividing the remaining amount by the number of contribution periods provides a transparent saving pace.

Keep records

Whether the money sits in one account or several, track how much belongs to each goal.

Do not confuse with emergencies

A known annual bill is not an emergency simply because it is expensive.

Educational information only. Use current product terms and the rules that apply in your country. For decisions with significant financial consequences, consider an appropriately qualified professional.