# Sinking Fund

*Everyday Money — Finicade finance glossary*

A sinking fund is money saved a little at a time for a known future expense, so it stops being an emergency. Car insurance, Christmas, a new laptop, the boiler that is clearly on its last year — none of these are surprises, but they wreck budgets when they land as a single lump. Divide the cost by the months you have: $1,200 of annual expenses becomes $100 a month. The name comes from corporate bonds, where issuers set money aside to retire debt at maturity.

**Also known as:** sinking funds, savings bucket

**Related terms:** [Emergency Fund](https://finicade.com/glossary/emergency-fund), [Budget](https://finicade.com/glossary/budget), [Zero-Based Budgeting](https://finicade.com/glossary/zero-based-budgeting), [Savings Account](https://finicade.com/glossary/savings-account)

Source: https://finicade.com/glossary/sinking-fund