Sinking Funds 101: The Budgeting Tool That Genuinely Changed My Life
When I first started budgeting after my divorce, every unexpected bill felt like a disaster.
The car rego came due? Cue panic.
Christmas? Stressful.
A kid’s birthday? That was a whole budgeting emergency in itself.
That was before I discovered sinking funds — and I honestly wish someone had told me about them sooner.
What is a sinking fund?
A sinking fund is money you set aside gradually for an expense you know is coming, even if it doesn’t happen every month.
Think of it like this:
If your car costs $600 a year in maintenance, instead of scrambling for $600 in one go, you set aside $50/month throughout the year.
Or, if you know you spend on average $500 on clothes per year as a family, then you set aside $41.70/month throughout the year.
It’s not a separate budget.
It’s a strategy — to stop future expenses from wrecking your current stability, and to make sure you have the funds sitting there available when you need them.
Why sinking funds matter (especially for women rebuilding)
If you’ve come through financial abuse, single motherhood, benefit life, or just never had a financial buffer, you know that unexpected expenses aren’t just inconvenient.
They’re triggering.
Sinking funds give you back control.
They’re how we go from reacting to preparing.
And when you’re on a tight income, that kind of emotional safety net is everything.
What I use sinking funds for
Here are a few of the sinking funds I’ve personally built into my budget:
🎂 Birthdays – Kids, family, even a little something for me
🎄 Christmas – Gifts, food, travel, whatever December throws at me
🚗 Car expenses – WOF, rego, servicing, new tyres (anything more would come out of my emergency fund)
🧸 Childcare – School holiday programmes or unexpected costs
💡 Utilities – Power and water bills that fluctuate throughout the year
👚 Clothing - A sinking fund for me and my daughter
Even if I can only put $5–10/week into some of them, it adds up.
And it feels so much better to face a bill I’m already prepared for.
How to set up your sinking funds
Make a list of any non-monthly expenses that come up during the year
Work out the total cost, then divide by the number of months until it’s due
Create separate categories in your budgeting app, bank account, or even a notebook
Transfer money regularly — even small amounts help
Use it guilt-free when the expense comes up
You don’t need a six-figure income to use sinking funds
In fact, if your income is tight, sinking funds can be your lifeline.
They reduce anxiety.
They protect your emergency fund.
They give you the power to say: “I saw this coming — and I’m ready.”
If you’re rebuilding your finances, starting over, or just trying to get out of survival mode — please start here.
Sinking funds are simple. But they’re powerful.
And trust me: You are worth the preparation.
