Sinking fund
A sinking fund is money you put aside regularly for a known future expense, such as car repairs, Christmas or an annual insurance bill.
Also known as: sinking funds
Instead of facing a large bill all at once, you divide the cost by the number of months until it is due and save that amount each month. For example, a £600 annual car cost needs £50 a month.
Sinking funds keep predictable costs from becoming emergencies, and let your emergency fund stay for genuine surprises.
Our free budget planner can help you put this into practice, and nothing you enter is stored.
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