Sinking Fund
Money set aside for a planned future expense — holiday, Christmas gifts, car registration. Unlike an emergency fund (for surprises), a sinking fund is for things you know are coming.
A sinking fund is money you set aside regularly for a known future expense. Unlike an emergency fund (which covers unexpected costs), a sinking fund is for things you can predict: Christmas gifts, annual car registration, insurance premiums, holidays, or a new laptop.
The concept is simple: if you know Christmas will cost $600 in December, save $50/month starting in January. When December arrives, the money is there and it doesn't blow your budget.
You can create sinking funds for anything — some people have separate savings goals for holidays, car maintenance, gifts, medical expenses, and home repairs.
Why this matters
Sinking funds prevent the cycle of 'I knew this expense was coming but didn't save for it'. They turn irregular large expenses into predictable small ones. Setting up savings goals in Steady for each sinking fund makes this automatic — you can see your progress and know exactly when you'll have enough.
Related Budgeting terms
Safe to Spend
Your available balance minus upcoming bills and savings commitments. It's the amount you can actually spend without going into the red. Steady shows this number on your dashboard.
50/30/20 Rule
A budgeting guideline: 50% of income on needs (rent, food, bills), 30% on wants (dining out, entertainment), 20% on savings and debt repayment.
Zero-Based Budget
A budgeting method where every dollar of income is assigned a job (expenses, savings, or debt). At the end of the month, income minus allocated amounts = zero. YNAB uses this method.
Emergency Fund
Savings set aside for unexpected expenses — car repairs, medical bills, job loss. Most experts recommend 3-6 months of living expenses. Keep it in an on-call savings account for instant access.
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