Understanding Sinking Funds For Better Budgeting

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A sinking fund is a cash reserve in your account that holds calculated funds for future expenses.

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A sinking fund might sound like an emergency fund, but it is not. They have two separate structures.

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The emergency fund is your last resort; therefore, you do not dig into it until you run out of all your resources.

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The purpose of a sinking fund is to have enough liquid cash savings to cover anticipated expenses.

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The planned expense could be something as small as a gift purchase or Christmas costs or as big as a family vacation and furniture purchase.

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A rainy day fund takes care of life’s unexpected events. You’d never expect to lose your job, yet, it is not uncommon.

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You are not required to come up with a considerable amount of money in a short time. It protects you from going into debt.

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Understanding Sinking Funds For Better Budgeting

A sinking fund is a cash reserve in your account that holds calculated funds for future expenses.

A sinking fund might sound like an emergency fund, but it is not. They have two separate structures.

The emergency fund is your last resort; therefore, you do not dig into it until you run out of all your resources.

The purpose of a sinking fund is to have enough liquid cash savings to cover anticipated expenses.

The planned expense could be something as small as a gift purchase or Christmas costs or as big as a family vacation and furniture purchase.

COVERED PLANNED EXPENSES

A rainy day fund takes care of life’s unexpected events. You’d never expect to lose your job, yet, it is not uncommon.

PROTECT EMERGENCY FUND

You are not required to come up with a considerable amount of money in a short time. It protects you from going into debt.

FOR MORE STORIES, VISIT CELEBZ NET WORTH

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