Sinking Funds Explained – EP 253

Listen on Your Favorite Podcast Player

Shockingly, not a lot of people know enough about sinking funds when it comes to saving and we are here to change that. Jen and Jill take you to another informative yet fun-filled episode on saving money, emergency, and sinking funds. We’re going to deep dive into its importance, differences, purpose, and what you should do to start one. 

You’re saying “NO” now so that you can save for other things.


  • Debt freedom. If you know us you know we believe debt is neutral, it’s what you do with debt that can grow or limit your finances. We also know that getting rid of debt is friggin’ awesome and after a recent survey 60% of you are trying to do just that. But this sponsor isn’t for you… directly. This one is for our listeners who’ve paid off debt. Because we want to feature and celebrate you in an upcoming series called Debt Payoff Stories. We want to share your story to celebrate your accomplishments and inspire others on their debt payoff journey. So if you’ve reached your debt payoff goal, even if it’s not 100% of your debt we’d love to hear from you. Please head to for more info and to fill out a short pre-screen survey. 

6 Reasons To Start A Sinking Fund Now

In case you’re still not convinced, here’s an article released by Forbes in which they listed down reasons on why you should start a sinking fund. The stated reasons are not only doable but it gives us freedom and flexibility in creating our sinking fund (e.g how large your sinking fund is, how often you make a contribution, how much you contribute – it is all up to you). 

What Jen + Jill have to say:

Jill liked the flexibility of the reasons stated by the article and how it gave an intentional and specific 2 foundational rules when starting one: you intentionally save and you don’t use the sinking fund for something else. It means your emergency funds remain intact and you should avoid impulse purchases.

Jen wants you to go around your house and look at the things that are going to need to be replaced as this is going to help you identify what are the things you might need a sinking fund for. A sinking fund can help you avoid interest, pay-off debt at the same time and it is great for those with variable income. 

How Do You Start a Sinking Fund? (4 Steps)

If you’re determined to already start your sinking fund but do not know where to begin, here are 4 steps to start your own sinking fund listed by Spero Financial’s article. This did not only give short and simple steps in starting it but it also defined and gave ideas for which a sinking fund might prove useful. 

What Jen + Jill have to say:

You should determine a timeline and input in which Jill adds that it’s going to help you determine how you’re approaching your sinking fund. A tracking system to help you organize can be a great way to execute this. 

Jen reminds us to decide what type of account will work best for this fund by checking if they meet certain qualifications. Head over to in which the Frugal Friends thinks meets all saving account qualifications. It has a really good APY (above 2%) and you will typically get a debit card with the account as well so you won’t ever have to wait 1-3 days to transfer it into your regular account. 

The kind of things we have sinking funds for

For Jill, it’s for Christmas, travel, Eric’s music equipment, renovations, and a generosity fund 🙂 — they’re all connected to her core values which are beauty, generosity, and community. Meanwhile, Jen has 1 sinking fund…and it’s for everything! Right now it’s renovation that the money is going towards.

Bill of The Week

Thank you Ashley from Ohio for sharing your bill about yourself and your 7-year-old son fixing your own kitchen sink faucet with shut-off valves! AND YOUR SON’S NAME IS WILLIAM!!

Thanks so Much for Listening!

Thanks so much for listening! Many of you know we have a private club for listeners trying to pay off debt but we also have a Patreon for frugal friends who just want to support the show and get some free goodies. Today we want to shout out our newest Patrons from September!!

🥂 🥂 🥂 🥂 🥂
Janine T.
Chapin C.
Felicia B.
Samantha H.
Ashley R.
Deborah M.
Elizabeth C.
Alicia M.
Jennifer E.
Alayna E.
Donna F.
Alison H.
Rachael P.
Jennifer J.
Kristie L.
Chris A.
Ashley L.
Cindy A.
Kristin W.
Kelli K.
Savannah D.
Noemi H.

Congrats! Thanks for listening and if you want to check out our monthly challenge community head to to see what challenge we have coming up next.

Keep leaving us reviews on iTunes or Stitcher, and sending the screenshot to And don’t forget to share your favorite quote from the episode by using the hashtag #FrugalFriendsNote. 😉

More To Explore