Do you struggle to find lump sums of money for annual payments and everyday spending? Would you like to get a better handle on your finances? How about having money there when you need it and even making more from the money that you have? Sinking funds could be the perfect way for you to manage your money and be ready for all those payments we have to make throughout the year. Let’s have a look at the ultimate sinking funds list.
What Is A Sinking Fund?
Firstly, we need to figure out exactly what a sinking fund is.
It is a way of saving money little and often to have a pot of money there when you need it.
For example, and we’ll get onto the examples of sinking funds list shortly, car ownership. If you own a car and know that you need to pay the insurance for it every year, rather than trying to find £300+ before the payment is due, you save money every week or month. £300 divided by 12 monthly payments is £25 a month. So save that into a dedicated fund monthly and you’ll have £300 ready and waiting (as well as a bit of interest on top!) for you when you need to pay that car insurance payment. You can divide it by 52 to get your weekly amount, which in this example would be £5.77.
You’ll thank yourself for implementing this as it takes the stress away from finding money when you need it, as it is already put aside and waiting for you to use it.
Sinking Funds List
Now, onto the list of sinking funds that you could set up today to make your finances more manageable and life that little less chaotic. Of course, you don’t have to set up all of these sinking fund categories as some might not be applicable to your life situation. Many of them though, can be used to organise your money.
- Christmas
- Vets bills
- Car maintenance
- Home insurance
- Car insurance
- Home improvements
- Charity giving
- Tithing
- Birthday parties
- Birthday gifts
- Celebration meals out
- Taxes
- Extra circular activities
- Holiday
- Wedding
- Clothing
- School uniform
- Retirement
As you can see from this handful of examples, the list of sinking funds is pretty endless. If you can think of something that you need to pay for, you can save up over the course of a number of months and pay into a sinking fund so the cash is waiting for you when you need it.
It is such a great way of avoiding financial stress. By organising your finances and shifting money out of your current account when you get paid, into different pots of cash, you can get a better overview of your financial position and prepare for those bills.
Is An Emergency Fund A Sinking Fund?
Many people consider an emergency fund to be a sinking fund, but it is slightly different. It is there if you need it, rather than when you need it. It is generally considered that we should have emergency funds that will cover between three and twelve months of bills such as mortgage, heating and putting food on the table. This is just incase something happens where we lose our jobs or cannot work. This shouldn’t be touched apart from in an absolute emergency. Whereas sinking funds are set up in order to be spent at a certain point.
Set Up Your Sinking Funds
Is it time to set up your sinking funds? Use our sinking funds list above to be inspired but tailor the pots of money you put aside to suit your financial situation and your everyday life. Some of us will have hobbies that need funding, whereas others will be more concerned with paying into a house deposit sinking fund. Make your personal finances personal with your sinking funds and start getting on top of your money.
