The TRUTH about "SINKING FUNDS" | How to Save for Expected Expenses | JENNIFER COOK

[@jordanwilliams9300]

So the "sinking" in sinking funds illustrates how a big purchase (e.g., an appliance) breaks down over time (aka eventually it will "sink back into the ground" and need to be replaced). I actually like the term "sinking fund" because I'm literally "sinking" (or squirreling away) money into a separate stash of cash that I have *in addition to* my monthly cash flow. Just like the money I put into my investment accounts, that money is "gone" (aka buried aka SUNK) until a qualifying expense comes along. Also, because my sinking funds $ stays "hidden" from me on a different page of my budget spreadsheet, it forces me to be a lot more intentional about spending $ out of those funds. Finally,, seeing all the money that Past Me diligently sank into "investing" into Present/Future Me's needs and wants is a VERY welcome surprise when I do need/want to tap into one of my sinking funds! 💰😎👍

[@SJP43]

This is the video I was looking for!! I couldn’t for the life of me understand nor get the concept of sinking funds vs emergency savings in the YT budgeting world. People kept using it and then had a million categories, I was completely lost. This helped. I’m going to figure out a “bucket”expense plan that works specifically for my lifestyle and simple. Thank you.

[@THEJENNIFERCOOK]

I am so happy it helped you! I felt the same way when I first heard about them!

[@amyg918]

I have 18 sinkings funds - but they are a life and budget saver. We even get a 3% discount on house/car insurance paying in full every year. Some examples I have Sinking funds for our quarterly IRS and State taxes - Christmas, Halloween, Birthday, our Accountant after taxes, Vacation, our grandsons extras - (example if we want to treat them for batting lessons) - our dogs 3 heart medications every 3 months that isn't cheap. Knowing the money is there I am never caught out or stressed "now what" moment. Sinking funds are a vital part of our budget.

[@charlenebrissette3348]

I have sinking funds for everything. It sure came in handy this year when our air conditioner broke we could replace it no problem and when our car was making weird noises we got it fixed paying cash with no worries.

[@wiseman4160]

I know for expenses that don't happen every year an reserve fund is great. Especially for people like landlords. Some people that need a lawyer some years and other years don't need one. Bucket fund would be great for things you deal with every year like home maintenance car maintenance clothing for each season ect.

[@karil6461]

It's giving Rice and Beans

[@SherryGooding-mx8pu]

I agree with you. I didn't understand what a sinking funds are.

[@jaytee2642]

Thank you!!! I recently came upon the term "sinking fund" and was having trouble wrapping my brain around it because the name didn't seem logical to me. Now I understand it. Personally, I'd name each fund whatever it was going to be used for: Vacation fund Christmas fund New (used) car fund, etc For years I've come across people who didn't have money for some annual expense, like car registration ( which can be pricey here in California). Well...you KNOW when it's due and you have a pretty good idea of how much it will be. Can you figure out how to divide it by 12? Good! Set that much money aside every month and you're golden!👍🏻 Thanks again for giving me clarity on a concept I basically understood, but whose term was fairly nonsensical (to me, anyway).

[@BronwenBudgets]

I think of sinking the money into them but would rather they were called floating funds because they keep my budget afloat, lol. I have quite a lot of them for various things (eg vet, gifts, Christmas, travel, tech, health) and love them.

[@123canadagirl]

I like reserve fund. Great content! I really learn a lot from your channel and you can be funny as well

[@THEJENNIFERCOOK]

Thank you so much! You are always so kind 🤗

[@mljs9245]

I call mine a reserve fund. Sinking fund never makes sense to me.

[@ERIN_198]

It means the fund is 'sinking' because you access it regularly. i.e the money is sinking. It is not an investment or long term savings

[@ruthpeterson1478]

Thank you, yes, it definitely sounds stupid. I tend to be rather literal in my thinking, it seems like such a negative term for finances. Call them anything else, just not sinking 😩

[@THEJENNIFERCOOK]

🤗

[@karenball331]

I dont know how I missed this one but Its great

[@lindamcteer]

You're right - sinking fund sounds dumb; however, we do have a sinking fund! Our property taxes and homeowners insurance are so expensive that we have a designated amount of money we save each month so we'll have the money to pay property taxes in February and homeowners insurance in July. Great video, as usual.

[@THEJENNIFERCOOK]

🤗

[@sekwa75]

I do not use this term, but I have been doing this for awhile. I have accounts at two different credit unions. One is my main account for day-to-day activities; the other is only used occasionally. I have the direct deposit for my paycheck set up to automatically send a set amount to the other account. The rest is sent to my main account, so that is the number I normally see when I check my bank balance. Since I “don’t see” the amount going to the other account, I don’t miss it. At the other credit union, I have both checking and savings; the deposit from my paycheck goes into checking, and I have an automatic transfer set to move part of the deposit into savings. So I have both an emergency fund and a sinking fund at the other credit union; I just have not been using those terms for them.

[@inea-fijourney22]

Um, I have to agree... I will start calling mine "Future Expense Funds" in my videos 😅 Or "Anticipating Fund" 🤔😏

[@meganklockmann7290]

I'd say call it "vacation' fund or for whatever your saving for. To simplify it you could call it the Fun Bucket Fund

[@ts1358]

I know that I am super late to to the game on this one but my husband and I just watched this video for the first time. We hate the term sinking funds...so awhile ago I started calling them our S.O.S Funds...because that is what they do for us...they save our ship from sinking...lol. We also found the video funny and entertaining as well.

[@THEJENNIFERCOOK]

That is a great term for them! 🤗

[@ts1358]

@@THEJENNIFERCOOK Thank You

[@adz5bneweng589]

KZbin should have a "love" button option so I can use it for your videos.

[@nataliefontane]

I thought the term sinking funds wasn't the best either. Like a sinking ship. Why would you want to associate financial growth with that? I just call things my car savings and my vacation savings. I don't divide up anything else. If an appliance needs to be replaced, that comes out of emergency savings, and we replenish it ASAP.

[@prayersquad3391]

I think it's a male thing. Sinking a hole in one or a basketball in the net. I call it a savings fund. Rainy day for emergencies; savings for annual things. You could call it an annual savings fund.

[@kbs7583]

I was putting on my makeup while listening to you, and when you said you pulled numbers out of your "rear end" I had to stop and howl ! You're the real deal. Loved the video.

[@THEJENNIFERCOOK]

I am glad I could make you laugh! 🤣🤣🤣

[@blackbutterfly233ify]

Thanks for the video and the name change

[@CourtneysCockpit]

I agree. Its a very negative term for what it is and confusing. I hate to use it and just say savings

[@ReBeccaRez]

Expected expenses fund

[@charlenebrissette3348]

I don’t really care for the term either but I think it is called “sinking funds” because you are sinking funds into a certain category.

[@SailingSeaStory]

I think the term comes from engineering, like a heat sink.

[@UnStrungHero]

I like the bucket term. Sinking just sounds too negative.

[@agrafkaable]

I agree. Like jinxing it, by giving it negative name

[@thosewhowander5815]

I always thought "Syncing Funds" makes so much more sense. Like cause it SYNCS up with the total expense at the end.

[@THEJENNIFERCOOK]

Now that makes sense!

[@CC-TimesTwo]

Savings category

[@phylissbrassey8431]

I don’t like sinking fund and I don’t like “buckets” but I love the idea. I begin a Christmas fund in January by deciding the total I want, decide it by 12 and set the monthly amount in one of those funds. I actually have several these accounts in my budget which is fantastic since I am older and now have a smaller monthly income. I know you have a budget and I use YNAB (you need a budget) Unlike you I set up special categories and since I began that life is so much calmer

[@deadmanswife3625]

When you're leasing equipment to a business you own sometimes it can make better sense not to own it out right but to finance it. Depending upon how sophisticated you are at taxes

[@jenson8931]

I like the idea of Reserved Funds😊

[@missymurphy9996]

I think sinking fund is a dumb term too. I just call it savings

[@ingerfalch-jacobsen1717]

I agree! I thought it was similar to "sunk cost", but it's almost the opposite.

[@FrugalOverFifty]

This is really helpful. I've never understood this term. I use You Need A Budget, which refers to this type of thing as True Expenses. Creating line items in my budget for these types of expenses has been an absolute game-changer for me. It brings not only financial security but daily peace of mind to know I won't be facing an emergency when the insurance bill is due, because I saved up over a year. Thank you for this detailed explanation, it really helped me understand the background of this practice.

[@adz5bneweng589]

I love your channel. Your information is priceless!

[@THEJENNIFERCOOK]

Thank you so much Ann! 🤗❤

[@elainecruz5606]

I Hear alot about Sinking Fund, My Method is Simple and it works for me, I Prefer to call it Floating Fund, I plan to Float in Challenging Times Amen.💝 Peace be with You.💝 Hey TFS. ☺

[@altaneri6980]

Expense Bucket

[@TheKelmonster]

I call it "short term savings" or "revolving fund."

[@KLUDUP]

I couldn’t agree more, first time I heard about it I couldn’t get my head round it. I still don’t like the name. 😅

[@frugalsweetlife3427]

I like your whiteboard

[@garynhelfrich]

I like reserve fund

[@crystalh1402]

Oh boy having flashbacks of the garage door fiasco we had a few years ago… but I appreciate the video 👍

[@deadmanswife3625]

I'm not sinking funding into nothing bwahahah

[@marymiller5829]

NSYNC---BYE BYE BYE!!!!

[@bex438]

I didn't understand the term sinking fund either and I wouldn't use it myself, but apparently according to another 'frugal' channel I watch, it's called a sinking fund because the amount of money that you have put aside in that fund for those expected expenses sinks ie gets lower as you pay for them throughout the year, it made more sense when explained like this but I still don't like the term 😉

[@zaakirabdulsuthar]

It's not sinking 😂

[@9liveslisa]

I always tell my friends when talking about saving for retirement, "Don't forget about inflation. It will bite you if you don't plan for it."