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Sinking Fund Example: How to Use Sinking Funds to Pay for your Wedding

 

image of high heel upside down with engagement and wedding rings on the heel
Sinking Fund Example: How to use sinking funds to pay for your wedding

Since Christmas in July is upon us, I got to thinking about sinking funds. I use a sinking fund to purchase holiday gifts and shop after Christmas with money I set aside throughout the year. 

A sinking fund is a predetermined amount of money set aside over time for a specific purpose. You divide the amount of money you need by the amount of time you have to save until your target date to make the payments more affordable. 

Sinking funds help you avoid debt by dividing the full payment into smaller amounts over time - you avoid needing a large sum all at once or having to use credit. 

I use sinking funds in high yield savings accounts for all sorts of things - traveling, shopping sales, splurging on luxury bedding or meaningful jewelry. But paying for my wedding definitely required the most sinking funds simultaneously, and is therefore the best sinking fund example! 

Sinking funds allowed us to have our dream wedding without going into debt

I DO NOT recommend going into debt to get married! While there are all sorts of ways to tie the knot, having a wedding remains popular and expensive. Many people dream of their wedding day - it's emotional and often comes with a high price tag. The average wedding in 2023 costs $30,000 According to Bankrate

Some of the best decisions we made during the wedding planning process were to have a long engagement (nearly two years), determine our must haves, and set up sinking funds to pay for it all. We weren't stressed during the planning process, had a blast on our wedding day, and banked all of the monetary gifts we received. 

Each of the major spending categories for the wedding was its own sinking fund

The major categories for our wedding were as follows:
  • Food and alcohol
  • Videographer 
  • Photographer
  • Entertainment
  • Photo booth
  • Glam squad
  • Flowers
There are probably other categories that I'm blanking on nearly 8 years later, but you get the gist! Wedding planning is conducive to sinking funds for several reasons. Your wedding day is the target date (give or take)! For example, the balance for certain vendors may be due two weeks prior, whereas others may accept payment on the day of your wedding, or even two weeks after. 

image og a sinking fund jar $600/8 months = $75 per month
So the due date is your target date, and the remaining balance is your savings goal. You divide the
balance by the number of months until it's due. 

For example, you owe $600 for a four hour photo booth rental plus gas and mileage to the venue. Payment is due on your wedding day eight months from now. $600 divided by 8 months = $75 per month. Easy right?!

You can create as many sinking funds as you like, and set the terms to suit you. Create a spreadsheet to track your sinking funds and progress. If you prefer pen and paper, then check out this Sinking Funds Savings Book (commissions earned). 

We got married in September, and I staggered our sinking funds so that we paid off one major thing each month leading up to our wedding day. 

Most of the costs were set and known early on, whereas we had to wait for the RSVP deadline to pass to know the final count of people attending to pay for the food. 

**PRO TIP: pay as much as you can in advance and delegate day of payments to someone you trust so you can soak in every moment of your big day! It truly goes so fast. 

Summary

A sinking fund is money set aside for a specific purpose by a certain date. Rather than produce a large sum of money at once or finance a major purchase, you save small amounts over the amount of time you have until your target date. 

There is no limit to the amount of sinking funds you can have. Sinking funds can be for numerous purposes and kept in various forms. Paying for a wedding is a great sinking fund example - it's a major expense occurring on a specific date for which you can set up one of more sinking funds to cover the cost in the amount of time leading up to it. Build your sinking funds in high yield savings accounts to boost your saving efforts. 


What sinking funds do you have? Or plan to have? Let me know in the comments!


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