5 Tricks That Make Saving for Large Expenses Easy

Have large unexpected expenses busted your budget? We should know unexpected expenses, like broken down cars and air conditioners, will eventually happen to everyone. Here are five tips and tricks that make saving for large expenses and financial emergencies easy! Budgeting Money | Budgeting Tips | Life HacksLarge expenses sometimes surprise us by popping up at the most inopportune times.

More often than not, however, you probably should have planned for these big expenses to pop up.

A big home maintenance item, like replacing your roof or air conditioner, or an expensive car repair can both be predicted in general terms.

You know neither of these items will last forever and most people can predict the average life of these items.

So, how can you save for these expenses instead of busting your budget or going into debt when these expenses pop up?

Use these 5 ways below to start saving.

Start a Sinking Fund

The best way to start saving for large expenses is to set up something called a sinking fund.

Essentially, a sinking fund is a separate account or amount of money that you set aside to eventually replace a big expensive item when it fails or for when you decide to get a new one.

The best way to run a sinking fund is to immediately set one up after you make a purchase that will eventually need to be replaced.

For instance, if you just bought a $20,000 car that you expect to last 10 years, you would need to start setting aside $2,000 per year to replace the car when your current car reaches the end of its life.

Basically, take the amount you think you will need to cover the large expense and divide it by the number of years, months or weeks before you’ll have to replace it, depending on how often you plan to set aside money. Then, simply save the money each time period and you’ll have enough money for the large expense, assuming it occurs on or after when you planned for it to happen.

Set Aside Bonuses

Another great way to set aside money for large expenses is to put your bonuses aside. Unfortunately, not everyone has the pleasure of earning bonuses, so this won’t work for everyone, but it can get you a long way toward covering your next large planned expense.

Set Aside Part Of Your Raise

Setting aside part, or all, of your raises for large expenses is another great way to save. The bigger your raises, the more you can save. For most people, you’ll need to save in other ways in order to make sure you have enough money to cover your next large planned expense, but this will get you at least part of the way there.

Put Gifts and “Found Money” Toward Your Big Purchases

Gifts and “found money” can help you fund your large planned expenses, too. Whenever we get cash, we generally set it aside for our vacations, but you could set it aside for a new car or roof if you’d rather.

Found money and unexpected money you come across, such as a utility deposit refund, will add to your sinking fund even more.

Sell Items And Save Proceeds

If your large expense is just about to happen and you don’t have enough money to pay for it, consider selling items and saving the proceeds toward the large expense. Chances are you have a ton of stuff around the house that you no longer use. Turn that stuff into cash on craigslist, eBay or Amazon and make it useful to what you need now.

Large expenses rarely just pop up. If you know where to look for them, you’ll see them coming. For everything else, you can use your emergency fund. Just don’t get caught using your emergency fund for something you should have seen coming, like a roof replacement.

Instead, use the tips above to make sure you are prepared when these large expenses hit.

What big planned expenses do you save for? How do you save for them? Share in the comments below!

Photo by: daryl_mitchell Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Great point Lance. really should be factoring into your budget outside of your e-fund and consider short term saving 5-10 years.

  2. We definitely use the sinking fund theory in our budgeting. Even for things like paying utility bills, I track the allocation of our account to each area, and divide the monthly allocation equally over 12 months. So, our ‘water bill’ budget has a nice big balance in it now, but once watering season starts and the bills jump, the increase in the bill won’t adversely impact our budget.

  3. Great article and thoughts on a sinking fund! Do you think many people would get a sinking fund and a rainy day fund confused? Or use funds from an emergency account (I would generally define one for career loss, etc) to cover failing household items?

    • I do think people may get a sinking fund and a rainy day fund confused, but hopefully this article makes it clear that they are not one in the same. Emergency or rainy day funds are not for expenses that you can predict, which is exactly what sinking funds are for.

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