Step 1: Decide what you’re saving up for. Let’s pretend you’re starting a sinking fund for Christmas. … Step 2: Decide where you’re going to store your sinking fund. … Step 3: Decide how much you need to save. … Step 4: Set up your sinking fund in the budget.

How do you make a sinking fund?

1. Step 1: Decide what you’re saving up for. Let’s pretend you’re starting a sinking fund for Christmas. …
2. Step 2: Decide where you’re going to store your sinking fund. …
3. Step 3: Decide how much you need to save. …
4. Step 4: Set up your sinking fund in the budget.

How much should I put in a sinking fund?

I recommend keeping at least one month of income on hand to cover any unexpected expenses. Once you have at least $1,000 saved up, you can start to aggressively tackle your debt. But then, continue to contribute to your emergency fund bit by bit, even while you’re paying off debt.