Question

Regarding sinking funds.  I know you set a target balance, but do you keep funding up to the target balance after any expenditures?Regarding sinking funds. I know you set a target balance, but do you keep funding up to the target balance after any expenditures? So, let's say I have a target of $500 for the year in my Gifts category. I put $19. 23 in that sinking fund from each of 26 paychecks during the year. At the end of February, I should have $76. 92. Kid #1 has a birthday party to go to. We spend $20. Then for whatever reason, I have some extra money and want to fully fund my sinking fund. Is fully funded at this point $480 because I spent $20 of my yearly budget or is it still $500. I know I'm overly complicating this, but I can't decide what I want to do.  

Answer 1

I’m doing something similar in my moving sinking fund. We have had some expenses come up already so I count that as part of my total. For example, husband and I have deposited $930 into the fund. We’ve used $250 of those funds for new insurance. I still consider my total funding $930 but I’ve tracked the amount of money spent since as we get closer to moving day, we will have more purchases going on. ☺️ Hopefully this helps.  

Answer 2

Personally, i try to keep my sinking funds replenished if possible. it’s easier for me to top it off rather then spend it all and then start over.  

Answer 3

I divide my sinking funds into fixed and variable. Fixed expenses have a specific amount and a target pay by date, variable have an estimated amount and rollover month to month. When a fixed bill is paid that category starts accumulating again from zero, when a variable fund incurs an expense, the available balance is reduced by that expenditure and keeps accumulating at the original monthly budgeted amount.