Sinking Funds: 5 Things I Keep

There is talk about sinking funds in the personal finance community. I realized that I had been using the 'sinking funds' strategy for years without using this term. Below are five 'sinking funds that I keep. I think of sinking funds as planned large expenses. I have multiple separate savings accounts, and when I am paid, I transfer immediately to these 'sinking funds.'

1. Car insurance. I pay my car insurance in two large lump sums for a discount. When that withdraw comes from my checking account it feels like a big deal. To make it less of an impact, I created a sinking fund for insurance. I put 100 dollars in this account per month and then I transfer it over when my insurance is due.

2. Cell phone. I know that I'll want the new iPhone when it comes out because I spend so much time per day on my phone (and because I like photography; thanks Apple for turning our phones into our best cameras).

3. Birthdays/weddings. I typically know a year in advance about weddings, so I start adding $20 per month into this account for gifts and dresses. I try to use my rewards cards for free flights.

4. Hair/personal care/waxing. I spend a lot in this area, and I spend next to nothing going to restaurants. I place $90 per paycheck into this account. This covers monthly waxing and a cut/color every 4 months.

5. Moving fund. I may make one more move in my adulthood/career, and I've been saving for this move. If it doesn't happen, it will be moved to my home savings account (which I plan to start soon).