Seven Most Common Sinking Categories For Better Budgeting
Sinking funds have become very popular among people to regulate their expenses and manage personal finance. You may be surprised to know that even some businesses and organizations also use sinking fund categories to manage their financial payments.
The best sinking fund categories example can be the tiny amounts of money that you keep on adding to your traveling fund piggy box to open after a year. Think of the traveling fund as a category of the sinking fund. You will not have to take a heavy amount at once to manage the traveling expense.
Sinking Fund Categories
You may have been planning a budget for some time but are unsure where the money will come from for a particular expense. This is where the budgeting and planning with sinking fund categories comes in. They will help you develop strategies that will take a lot of stress off you.
You no longer have to use monthly payments or rely on a line of credit because you already have money set aside. You may take $50 and $100 out of your pay and save it for home repair and traveling expenses, for instance.
At the end of the year, you will have $600 for home repair expenses and $1200 for travel. It is how a sinking fund can be beneficial for you. There are a lot of sinking fund categories that you can use for your personal budgeting.
Sinking fund categories example
- Sinking Fund For Medical Expenses
Your and your family’s health is the most important thing that you have to take care of. Though you might have medical insurance for the whole family, still, there can be some unwanted emergencies when you need extra money for medical expenses. Many people fall short of their budgets solely due to unexpected medical expenses.
A medical expenses category included in your budget sinking fund categories can save you from this trouble. There are a lot of medical expenses that can be covered with the help of the medical fund sinking fund.
- Buying regular prescription drugs
- Purchasing over the counter medicines
- Medical apparatus for the home like BP measuring machine
- Physician and dental appointments
- Expenses for eyecare.
- Sinking Fund For Pet Care Expenses
Pets are like family members, and as they grow, your love and affection for them also increases. It is your obligation to take care of your pet’s needs and keep them well-fed and healthy. Raising a pet at home can cause you some expenses. You have to spend money on their food, grooming, and medical treatments, which can cost you handsome money.
The cost of your pet’s visit to an emergency veterinarian can be 800 to 1,000 dollars on average. So, saving some money in the form of a category among different sinking fund categories for pet care expenses can be very helpful. You may need to spend money on many costs related to pet care.
- Regular visits to the veterinarian
- A medical emergency
- Sterilization costs
- Expenses of pet boarding services
- Special pet food
- Sinking Fund For Home Repair and Maintenance
A home is a place that should be kept up to date and must be maintained regularly. No matter how much care you take of your home and its belongings, some repair and maintenance expenses always arise. You may need to upgrade a part of your home or purchase a new window or door which got broken.
Suppose that you have been saving money for home repair and maintenance in the form of a category among Dave Ramsey sinking fund categories,such as Anniversary,Baby care,Christmas,Education,vacation, house updates, and taxes.
Suddenly, one of your home windows gets broken, and you don’t have any money left on your monthly budget. You would have used your credit card to pay for this quick home repair expense.
But luckily, you have been putting some money for home repair on the sinking funds list. It is time to use that money you’ve set aside. This is an example of how a sinking fund can save you from the trouble of borrowing money and going outside of your budget.
- Holiday Expenses Sinking Fund
Who doesn’t love holidays? Everybody anxiously waits for the holiday season. You might also get excited by the thought of buying new clothes and holiday gifts for your friends and family or going on a holiday trip. Most people try to save money for holidays and vacations, but only some of them manage to do so.
You can easily save money with the help of a sinking fund for holiday expenses. It takes off the stress from your shoulder, and you no longer have to worry about holiday expenses. With the help of a sinking fund for holiday expenses, you can manage many things.
- Buying dresses and cards for holidays
- Purchasing holiday gifts
- Celebrations or holiday decorations
- Planning a trip with friends and family
- Sinking Fund For Car Maintenance
Your car is undoubtedly one of the most important things in your daily life. Every vehicle needs regular maintenance and repairs. Unfortunately, car accidents can cost you a lot of money to get your broken car back in good shape. But you can always play safe with the help of a sinking fund for car repair and maintenance.
There are a lot of expenses related to car repair and maintenance that can be paid with the help of a sinking fund. This can include changing oil and tires, brake assembly replacement, or regular washing and servicing. You can also pay for car insurance and leasing fees with the help of a sinking fund.
You can start by putting aside $50 for car repairs along with other sinking fund categories. You will be well prepared for car maintenance costs and even for emergency repairs.
You might be among those who don’t buy new clothes each month. Such people only buy clothes when previous ones get old enough and have to be discarded. A sinking fund category for clothing can be best suited for these people. You can save some dollars every month and buy more expensive and better clothes after a few months.
Modern-day branding and marketing by clothing brands can be persuasive and engaging. They might influence you into buying clothes even when you don’t need them. So instead of spending more money on the clothes you don’t need, you can save it as sinking funds for the time when you really need new clothes.
- Sinking Funds For Children’s Expenses
Parents always want what is best for their children. They want their kids to wear beautiful clothes, get a high-standard education, and eat the best food. However, a monthly budget can easily handle regular expenses for children like food, clothing, and entertainment. But a problem can originate when it comes to sudden or big costs like college fees or some medical procedure.
So having a category for children’s expenses among your sinking fund categories can be very beneficial. You can manage all the expenses of your children without worrying about borrowing or going out of budget.
Budget management has always been an issue for both individuals and businesses alike. You may run out of budget on the 15th of the month even though you had enough money to last for the whole month. It is the reason why proper budgeting is very important, and sinking funds can ideally help you manage your expenses.
Similarly, businesses can also take help from sinking funds. Most companies already know what category is a bond sinking fund and its importance. Some capital concentrated businesses often sell long-term bonds to fund the costs of buying new machinery or a plant.