Car inspection in March, annual insurance premium in May, family holiday in August, gifts in December. These items aren't unexpected — they happen at the same time every year. They still hit most households like emergencies: not in the budget, not in the emergency fund, so straight into the overdraft.

Sinking funds solve this with a simple idea: known irregular expenses are divided by twelve and saved monthly. When the date arrives, the money is there.

Sinking funds vs. emergency fund

Emergency fund: for unknown, truly unexpected loss events. Washing machine, job loss, dental crown.

Sinking funds: for known, plannable, dated expenses. Inspection, holidays, Christmas, annual insurance premiums.

Keep them separate — otherwise in November you're choosing between the Christmas budget and the emergency fund for the broken fridge.

The typical pots

  • Car: insurance, inspection, tyres, repairs — rule of thumb €80–150/month for a used car.

  • Holidays: annual budget divided by 12. €2,400 holiday = €200/month.

  • Gifts: birthdays + Christmas + occasions. Most households underestimate — honest estimate €40–80/month.

  • Annual insurance premiums: spread once-a-year items across 12.

  • Repairs / larger purchases: a must for homeowners. Rule of thumb 1% of property value per year.

  • Taxes (for self-employed): 25–35% of every invoice set aside immediately.

Where to park

A second savings account, mentally separated from the emergency fund. If your bank offers sub-accounts (DKB, ING, N26, C24), one sub-account per pot. Visibility is the whole trick — you want to see the holiday pot at €1,200, not lose it in a single pooled balance.

30-minute setup

1. List every annual line item

Car, insurance, holiday, gifts, larger appliances. Estimated annual sum. Divide by 12.

2. Open the account / sub-accounts

One savings account with as many sub-accounts as pots. No sub-accounts? A simple spreadsheet that tracks pot balances inside one account.

3. Set up standing orders

One per pot, dated the 1st. Fixed amounts.

What changes

In November nobody asks "how much for Christmas this year?" — the answer is in the pot. In March, the inspection isn't a crisis, it's a transfer. The year runs smoother because known expenses stop showing up as shocks.

The effect goes beyond money. Most financial crises aren't crises at all — they're known dates nobody set aside for. Sinking funds are the most boring and most effective answer.