Definition
Sinking Fund
Money saved a little at a time for a known, planned future expense.
A sinking fund is savings you build gradually for a specific, expected cost, like holiday gifts, car insurance, or a vacation. Instead of one painful bill, you set aside a small amount each month so the money is ready when the expense arrives.
Sinking funds are different from an emergency fund: an emergency fund is for surprises, while a sinking fund is for things you know are coming.