A sinking fund is a dedicated savings pot for a known future expense. Rather than treating predictable costs as unexpected emergencies, sinking funds spread the financial impact by saving a small amount each month toward an anticipated outgoing.
Modern digital banks (Monzo, Starling) allow multiple named savings pots within one account. Alternatively, use separate easy-access savings accounts. The key is labelling each pot by its purpose — named pots reduce the temptation to raid them for unrelated spending. Use our free sinking funds tracker to plan and monitor each fund.