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LIFEHACK
Finance30 minuteseasy

The Sinking Fund

Stop being ambushed by bills you knew were coming.

Car servicing, insurance renewals, Christmas, a friend's wedding. None of these are surprises. They only feel like emergencies because they arrive as one lump.

Predictable but irregular costs wreck budgets because they are budgeted at zero eleven months of the year. Dividing the annual total by twelve and setting it aside monthly turns a shock into a line item. The money is the same. The panic is not.

  1. 01

    List everything that is not monthly

    Insurance, servicing, holidays, birthdays, subscriptions billed yearly, dentist. Go through last year to find the ones you have forgotten.

  2. 02

    Total it and divide by twelve

    That number is what these actually cost you per month. It is usually larger than people expect and that is the useful part.

  3. 03

    Move it out with your savings transfer

    The day after payday, alongside the savings transfer, into a separate account. This money is already spent, it just has not left yet.

  4. 04

    Spend it without guilt

    When the bill comes, take it from the fund. That is what it is for. No decision needed.

Go deeper

What the paid version adds to this one.

  • The list of irregular costs people most often forget, by life stage

  • How to split one fund into categories without it becoming admin

  • What to do in year one, before the fund has filled up

  • The spreadsheet, plus a filled example