Sinking Fund
Money set aside gradually for a specific, planned future expense, so it does not blow your budget.
A sinking fund is a pot you build up over time toward a known upcoming cost, such as car maintenance, holidays, taxes, or replacing an appliance. Unlike an emergency fund, which covers surprises, a sinking fund is for expenses you can predict and schedule. Saving a little each month turns a large, lumpy bill into a series of painless contributions, avoiding debt or budget shocks. Keeping separate sinking funds for different goals makes progress visible and spending intentional. Assetli's budgets and goals help you set aside and track these funds.
Example
Expecting a $1,200 annual insurance bill, you save $100 a month into a sinking fund so the payment is fully covered when it arrives.
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Related terms
Emergency Fund
A liquid cash reserve set aside to cover unexpected expenses or income loss, typically 3–6 months of essential living costs.
Zero-Based Budgeting
A budgeting method where every dollar of income is assigned a purpose, so income minus expenses equals zero.
Savings Rate
The percentage of income saved or invested rather than spent, widely considered the most important factor in building wealth.
Cash Flow
The net amount of money moving in and out of your accounts over a given period — positive when income exceeds expenses, negative when it doesn't.
Explore more terms
50/30/20 Rule
A budgeting guideline that allocates 50% of after-tax income to needs, 30% to wants, and 20% to savings and debt repayment.
Envelope Method
A cash-based budgeting system where money is divided into physical or virtual envelopes, each assigned to a specific spending category.
Lifestyle Inflation
The tendency to increase spending as income rises, preventing growth in savings and wealth despite higher earnings.
Fixed vs Variable Expenses
Fixed expenses remain constant each month (rent, subscriptions), while variable expenses fluctuate based on usage or behavior (groceries, dining, fuel).
Gross vs Net Income
Gross income is your total earnings before deductions; net income is what reaches your account after taxes and contributions.
Disposable Income
The money left from your net income after covering essential living costs, available for saving, investing, or discretionary spending.