2/ A sinking Fund

A sinking fund is money set aside for specific upcoming expenses.

These are expenses that are to be met in the near future. These expenses include:

• School fees
• Purchase of a car
• Car repairs/maintenance
• Saving for vacation
• Holiday travel
• Insurance premiums For a sinking fund to serve it's purpose well: You should have:
• A known upcoming expense
• Assigned timeline You then include the sinking fund to your budget so that you can allocate resources to it from your income. #NOTE What's the difference between an emergency fund and a sinking fund? While an emergency fund is for unknown and unexpected expenses, A sinking fund is meant to cater for known and expected expenses within a defined timeline. Where do you save for a sinking fund. Like we have seen above, a Money Market Fund is the best avenue to save for short term expenses. However, it's advisable not to keep these accounts together. Tuzidi kujengana #SISINIMESH