The TRUTH about 'SINKING FUNDS' | How to Save for Expected Expenses | JENNIFER COOK

#sinkingfunds #frugalliving #jennifercook

If you are new here my name is Jennifer and I re-discovered frugal and simple living after being in debt in my 20's. On my channel I share information on how my family and I save money and live a simple life. We are also documenting our process to paying off our mortgage by 2024! Thank you for stopping by :)

[jordanwilliams]

So the "sinking" in sinking funds illustrates how a big purchase (e.g., an appliance) breaks down over time (aka eventually it will "sink back into the ground" and need to be replaced).

I actually like the term "sinking fund" because I'm literally "sinking" (or squirreling away) money into a separate stash of cash that I have *in addition to* my monthly cash flow. Just like the money I put into my investment accounts, that money is "gone" (aka buried aka SUNK) until a qualifying expense comes along. Also, because my sinking funds $ stays "hidden" from me on a different page of my budget spreadsheet, it forces me to be a lot more intentional about spending $ out of those funds. Finally, , seeing all the money that Past Me diligently sank into "investing" into Present/Future Me's needs and wants is a VERY welcome surprise when I do need/want to tap into one of my sinking funds! 💰😎👍

[SJP]

This is the video I was looking for!! I couldn’t for the life of me understand nor get the concept of sinking funds vs emergency savings in the YT budgeting world. People kept using it and then had a million categories, I was completely lost. This helped. I’m going to figure out a “bucket”expense plan that works specifically for my lifestyle and simple. Thank you.

[charlenebrissette]

I have sinking funds for everything. It sure came in handy this year when our air conditioner broke we could replace it no problem and when our car was making weird noises we got it fixed paying cash with no worries.

[karenball]

I dont know how I missed this one but Its great

[canadagirl]

I like reserve fund. Great content! I really learn a lot from your channel and you can be funny as well

[ruthpeterson]

Thank you, yes, it definitely sounds stupid. I tend to be rather literal in my thinking, it seems like such a negative term for finances. Call them anything else, just not sinking 😩

[BronwenBudgets]

I think of sinking the money into them but would rather they were called floating funds because they keep my budget afloat, lol. I have quite a lot of them for various things (eg vet, gifts, Christmas, travel, tech, health) and love them.

[ts]

I know that I am super late to to the game on this one but my husband and I just watched this video for the first time. We hate the term sinking funds...so awhile ago I started calling them our S.O.S Funds...because that is what they do for us...they save our ship from sinking...lol. We also found the video funny and entertaining as well.

[nataliefontane]

I thought the term sinking funds wasn't the best either. Like a sinking ship. Why would you want to associate financial growth with that? I just call things my car savings and my vacation savings. I don't divide up anything else. If an appliance needs to be replaced, that comes out of emergency savings, and we replenish it ASAP.

[ERIN_]

It means the fund is 'sinking' because you access it regularly. i.e the money is sinking. It is not an investment or long term savings

[tanyaandjay]

I think the term comes from engineering, like a heat sink.

[CourtneysCockpit]

I agree. Its a very negative term for what it is and confusing. I hate to use it and just say savings

[sekwa]

I do not use this term, but I have been doing this for awhile. I have accounts at two different credit unions. One is my main account for day-to-day activities; the other is only used occasionally. I have the direct deposit for my paycheck set up to automatically send a set amount to the other account. The rest is sent to my main account, so that is the number I normally see when I check my bank balance. Since I “don’t see” the amount going to the other account, I don’t miss it. At the other credit union, I have both checking and savings; the deposit from my paycheck goes into checking, and I have an automatic transfer set to move part of the deposit into savings. So I have both an emergency fund and a sinking fund at the other credit union; I just have not been using those terms for them.

[meganklockmann]

I'd say call it "vacation' fund or for whatever your saving for. To simplify it you could call it the Fun Bucket Fund

[jaytee]

Thank you!!!

I recently came upon the term "sinking fund" and was having trouble wrapping my brain around it because the name didn't seem logical to me.
Now I understand it.
Personally, I'd name each fund whatever it was going to be used for:
Vacation fund
Christmas fund
New (used) car fund, etc

For years I've come across people who didn't have money for some annual expense, like car registration ( which can be pricey here in California).
Well...you KNOW when it's due and you have a pretty good idea of how much it will be.
Can you figure out how to divide it by 12? Good! Set that much money aside every month and you're golden!👍🏻

Thanks again for giving me clarity on a concept I basically understood, but whose term was fairly nonsensical (to me, anyway).

[lindamcteer]

You're right - sinking fund sounds dumb; however, we do have a sinking fund! Our property taxes and homeowners insurance are so expensive that we have a designated amount of money we save each month so we'll have the money to pay property taxes in February and homeowners insurance in July. Great video, as usual.

[deadmanswife]

When you're leasing equipment to a business you own sometimes it can make better sense not to own it out right but to finance it.
Depending upon how sophisticated you are at taxes

[adzbneweng]

I love your channel. Your information is priceless!

[kbs]

I was putting on my makeup while listening to you, and when you said you pulled numbers out of your "rear end" I had to stop and howl ! You're the real deal. Loved the video.

[missymurphy]

I think sinking fund is a dumb term too. I just call it savings