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A sinking fund is one of the most important tools in your budget tackling toolkit. A good sinking fund helps you weather known and unknown costs that can disrupt your monthly spending. When you create a sinking fund you are setting a small savings goal and earmarking incoming funds to be put towards it. I love sinking funds so much I actually have a whole ‘nother series of posts on it that you can find here.
I didn’t budget before having children so my kids have always been a dominant factor in our budget. Over the last year I have added a few new sinking funds to our budget. So, because children grow and are also kind of destructive I hope these ideas also help jog your brain.
Back to School Clothes
Here is the realization that I had this year: I can’t make three complete children’s wardrobes on thrift store buys alone.
I admit defeat!
We used to try and rely completely on hand me downs, thrift store shopping and extreme sales to clothe our kids. It was pretty piecemeal and we struggled to replace items in a timely manner. So there were winters where kids were doubling up hoodies while we figured out how we would afford three new winter coats.
Don’t even get me started on shoes. How do kids wear out shoes so quickly?! It’s insane! Also, shoes get more expensive the bigger their feet get! Trying to find an amazing sale that lines up with when these children are going to wear through a set of shoes is impossible.
So long story short, I give up. I have a sinking fund in place for school clothes and summer clothes. I buy what I can second hand and make use of any hand me downs we’re given. Whatever is left over I use my sinking fund to purchase. It’s s much less of a headache and one less thing to be stressed about.
Birthdays and Anniversaries
I will absolutely be the first to say, I struggle to make birthdays and anniversaries special. I’m that mom who suddenly remembers the night before and is in a panic to make sure there’s at least pancake mix in the house for the next day.
Since these special days always seem to catch me by surprise, the very least I can do is create sinking funds for them. I know that when a birthday rolls around we can go out for a special dinner, hit a movie, and buy a gift. The money is already planned for and it doesn’t matter how our budget looks that month.
I may not be great at foreseeing these days, but the through the power of sinking funds I’m getting marginally better.
Right now I currently own the nicest car I’ve ever had in my life. It’s a 2013 Traverse we purchased a year ago from a local dealership and it has an extended warranty. In our history of owning used cars we’ve found that an extended warranty and a sinking fund are our best friends.
You see, our cars tend only to need work at the most inconvenient times possible. For reference, here are my three kids standing next to our broken down car during our 12 hour drive to Disney World.
If it’s not a catastrophic engine issues that gets us it’s the small nickel and diming of routine maintenance. Inspections, oil changes, new tires every couple years, alignments and then more alignments (I have a curb issue and I’m working on it). Creating a sinking fund to cover us for big problems and normal wear and tear has been a game changer.
We still use our emergency fund if we need to but this lets us stretch that fund or avoid emptying it if we can.
Whether you rent or own a home you should consider tucking some cash aside in a sinking fund. Hear me out.
As a home owner this needs to cover general home care stuff: bug spray, painting, replacing an appliance if it goes out. Those annoying things that crop up unexpectedly and there’s no landlord to call and fix.
As a renter you want to make sure that anything you are in charge of is covered. So if you have your own washer and dryer in the unit make sure you’re covered if it goes out. On a whole different topic, do you have renters insurance? If you don’t already have it, get some right away!
We are an Amazon Prime family and I’m not embarrassed to state that fact. Amazon delivers my toilet paper every month and Alexa talks to me while I’m lonely working from home. This grossly giant company has become pretty woven into our lives.
So I have a sinking fund to cover the cost of renewing our account membership each year.
I also have funds set up for any other large expense that comes out one time annually like, our life insurance policies and property taxes. Not being surprised by annual expenses has been a very positive change for us.
That is a wrap for my top recommended sinking funds for a families. Did you find any that you missed? Or a fund you were surprised not to see? Let me know what’s going in your sinking funds this year and make sure you snag a copy of our free sinking fund tracker excel spreadsheet.