sinking fund categories

23 Sinking Fund Categories to Help You Budget Better

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You may have mastered budgeting, but what about the art of saving? 

Saving money is just as important as budgeting. It goes hand in hand if you want to live stress-free and debt-free. 

But you’re not just saving money for a rainy day. You’re creating sinking funds.

Sinking funds are a system of saving for expenses that aren’t a monthly occurrence, but you know they are coming.

Saving a small amount every paycheck will help you pay cash for things like annual subscriptions, Christmas, or vacation without taking on credit card debt. 

Therefore, today we will talk about the most common sinking fund categories every family should consider to stay out of debt.

Related: How to Slay Your Debt Using the Debt Snowball

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Sinking fund categories to include in your budget

Every family’s priorities will differ, but here are the most common sinking funds you should consider saving for.

Long-term sinking funds

Long-term sinking funds are savings for things that take a year or more to save for. Here are some examples of long-term sinking funds.


Retirement is a long-term sinking fund that you should be saving for. 

Most financial advisors recommend saving 10-15% of your monthly income towards retirement, which can be saved in a 401k or a personal investment account like a Roth IRA.

But how much to save also depends on your age and lifestyle. Here is a retirement calculator that can help you plan how much you will need for retirement.


Vacations are another sinking fund that can be considered long-term. 

Whether saving for that once-in-a-lifetime vacation or an every-other-year trip, you’ll most likely be saving for a year or more.



Most dental insurance does not cover the total cost of orthodontics. Therefore, saving ahead of time for braces is a good idea because it can be an outrageous expense if you’re caught off guard.

Average cost of braces according to Oral B.

Traditional Metal BracesInvisalign

Thankfully our dentist gave us a heads-up that all three kids would need braces in the future. Therefore, we were able to plan ahead for this expense.

You can also purchase supplemental orthodontic insurance, which would also require a sinking fund to save to pay for in whole.


Children’s future education is a long-term expense that parents can choose to save for.

This can seem daunting. With the cost of college nowadays and multiple children, it may seem damn near impossible! That’s why starting early is the best option.

It’s best to research how much it will cost and then decide how much to save. 

We used this college savings calculator to help us figure out the projected cost of college tuition. Then, we decided on an amount we would save over the next 10-14 years. 

We set up savings accounts for each child, saving throughout the year and depositing as a lump sum.

Down payment for a home

Having a down payment for your mortgage has several benefits.

  • A lower monthly mortgage payment.
  • Less upfront fees.
  • More equity right away.

Most lenders recommend a 20% down payment. But the more you put down, the less of a monthly payment you will have.

Here is a helpful mortgage down payment calculator to help you figure out how much to save.


Weddings are crazy expensive! According to the Motley Fool, the average wedding cost for 2022 was $27,000. 

Trust me, you don’t want to start your new marriage with debt from that one special day.

If we could do it all over again, we would have married at the courthouse and had a party to celebrate our marriage.

But considering most people want a traditional wedding, it’s a good idea to save for it. Here are a few big-ticket items to consider when saving. 

  • Entertainment
  • Venue
  • Flowers
  • Food/drink/cake
  • Wedding rentals/decorations
  • Wedding dress/tux
  • Wedding planner or day of planner
  • Photography/videography
  • Officiant

New car

If you’re planning to buy a new or new-to-you car, save and pay for it with cash. Most times, you can get a better deal if you pay cash. It will also free up your monthly budget, not having a car payment.

Related: Everything You Need To Know About Sinking Funds For Beginners

Short-term sinking funds

Short-term sinking funds are saving funds that take less time to save, usually less than a year. Here are some short-term sinking funds to consider.


Whether you have insurance or not, most of us have medical-related costs that come up throughout the year. You should be saving for those expenses. 

A health savings account (HSA) through your employer or a separate savings account for medical expenses is a smart sinking fund to have.

Some medical costs to consider for your medical sinking funds are…

  • Copays
  • Dental work
  • Eyecare, including glasses and contact lenses
  • Prescriptions, vitamins, and over-the-counter medications
  • Planned surgical expenses
  • Pregnancy-related medical costs

Children are freaking expensive! Especially when you have multiple.

So, saving money will lessen the burden when it comes time to pay for the endless amount of crap they need and the activities they participate in.

It may be a good idea to save for these expenses:

  • Having a baby (start a fund to get ahead)
  • Daycare
  • Summer camp
  • Homeschool fees
  • Babysitter fees
  • Extracurricular activities
  • Birthday parties
  • Back to school shopping
  • Fundraisers

Pet Care

If you have pets, you know they can be just as expensive as kids!

So, make sure to set aside some extra money for these costs:

  • Annual checkups and shots
  • Prescription dog food
  • Prescription medications
  • Boarding
  • Grooming
  • Treats and toys


If you’re a military family, you know nothing is ever set in stone, and things change in the blink of an eye. 

You want to make sure you have these sinking funds set up so you’re not caught off guard and forced to take on debt that could have been prevented. 

  • PCS fund
  • Emergency travel fund
  • Military clothing fund
  • Retirement fund


Activities can be costly depending on how active your lifestyle is. Whether you’re busy with kids or have an active social life, you need to save for it.

Some activity sinking funds to consider include:  

  • Annual memberships (zoo, aquarium, waterpark, children’s museum)
  • Travel to visit family
  • Date night
  • Weekend getaways
  • Day trips with friends or family


Every time I turn around, a holiday, birthday, or anniversary requires a gift to be bought. It can get expensive!

You can handle this in two different ways…

  1. Decide not to buy. This is a smart decision if you don’t have the money to spend on gifts.
  2. Decide which gifts you are going to buy. Then, save for them. You may want to limit the number of parties your kids attend, who you buy birthday gifts for, or even cut down on Christmas gifts.


If you give to a charity or tithe to your church, saving ahead of time would be a good idea. 

Family photos or traditions

If you celebrate certain family traditions or get family photos done every couple of years, a sinking fund would help cover those costs.

Revolving sinking funds

A revolving sinking fund is savings for reoccurring things. Here are some common savings to consider.

Home maintenance

Homeownership is both rewarding and expensive! The ongoing upkeep to maintain our homes can be costly and, if not prepared for, can lead to a mountain of debt. 

So, make sure to think about these different costs to save for a home maintenance sinking fund. 

  •  HOA fees
  •  Insurance
  •  Property tax
  •  Home repairs (HVAC, septic, roof, painting, etc.)
  •  Furniture
  •  Natural gas
  •  Landscaping
  •  New appliances


It’s important to take care of yourself. And if you’re a parent, you do without a lot of times because you feel guilty spending the money.

But, you should set up a sinking fund to invest in yourself. Here are some self-care items to consider for your self-care sinking fund…

  • Gym memberships
  •  Hair cuts
  •  Manicure/pedicure
  •  Therapy
  •  Grooming
  •  Beauty
  •  Hobbies


Christmas happens every year, and it’s definitely the most expensive of all the holidays. 

Therefore if you celebrate it, it would be a good idea to save for it. Things to consider when saving…

  • Who do you need to buy presents for?
  • Do you need any decorations?
  • What events are you hosting or going to?
  • What are you doing for Christmas dinner?
  • Are you sending cards?
  • Do the kids have holiday school or extracurricular activities?

Related: How To Budget For Christmas: 15 Debt-Free Tips

Other holidays

Saving for other holidays is important too. Especially if you like to go big for particular holidays. Things to consider…

  • Decorations
  • Costumes
  • Holiday dinners (Easter, Thanksgiving, etc.)
  • Celebrations/parties (Memorial Day, 4th of July, Labor Day)


Some insurance companies offer a discount if you pay your premium in full for the 6-month or 12-month term. 

Therefore, saving throughout the year can help you to pay your policy in full and free up extra money in your monthly budget. 

Car maintenance/repair

Cars need to be maintained for safety and to help them last longer.  

Some sinking funds to consider when it comes to your car:

  • Car maintenance (oil changes, new tires, rotations, etc.)
  • Inspection
  • Registration
  • Car wash/wax


Set up a saving account for these business-related expenses you’ll most likely incur if you work for yourself.  

  • Taxes
  • Office supplies/furniture
  • Subscriptions to run your business
  • Education/training
  • Marketing


Clothing is essential, especially when you have kids that grow like weeds. Start a sinking fund if you don’t have the money to budget for it during the month. 

This way, you’ll have the money to shop for clothing and shoes every season or when needed.


Saving for upcoming expenses will help keep you on budget and out of debt. But, figuring out what costs to save for can be a challenge. 

Hopefully, this list of the most common sinking fund categories will help you manage your money and budget.

What things do you save for in advance? Leave a comment below.

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