Sinking funds are a savings for specific items. For example, Christmas, car repairs, car registration, birthdays, things that come up that are going to come up every year or a couple of times of year, or even for the purchase of a car.
What you do with a sinking fund is you decide on what you want to save for and then that money that you save is earmarked for that specific thing. It's not like a general savings, where if you needed to go get savings because you had something happen, or you needed to purchase something that you forgot to put in your budget.
For example, I budget Christmas, I budget my car, and I budget our RV registration and inspection (that kind of stuff). I just put it in there monthly, and it just comes out of my budget. So I don't even think about it, and I just automatically transfer.
I also do that with birthdays, so that I never don't have money for a birthday. Typically, because our daughter is 24 and our extra daughter is 25, I just try to have money available so that I don't have to scatter and run for something trying to get some thing. Money is more helpful to them than any kind of item because I believe my minimalism affects that as well. I would rather give them experiences, or if they need money for something, I would rather give them that than some thing, because things just take up space.
Let me give you an idea about this: If you started in May and were saving $50 a month until November, you would have $350 saved for Christmas. Now, if you save the $100, you would have $700, so you don't have to use your credit card and you don't have to overspend.
The thing about it is that you also need to set a budget for what you're going to spend, how much you're going to spend for each person, and how much you're going to spend for the entire Christmas. Again, you don't have to overspend. We, as a society, way overspend, and that's a lot of our love languages—we just give gifts, and you know, I don't really have a whole lot more to say about that.
My advice is to help you get started with that and save that for Christmas, because Christmas comes every year at the same time of year and we're always stuck. We're always like, "Oh my gosh, what am I going to do?" "How am I going to for Christmas?” or "I don't have enough money for this or that." So try this out. It's a great tip!
