Sinking Fund
✓ Last verified 14 Sep 2026
The short version
A sinking fund is money saved gradually, in fixed monthly instalments, toward a specific known future expense - a planned alternative to either scrambling for a lump sum or reaching for a loan when the expense arrives.
If a family wedding costing ₹1.5 lakh is expected in 12 months, setting aside ₹12,500/month in a separate small fund means the money is simply there when needed - no last-minute borrowing, no raiding investments earmarked for something else. Common sinking-fund uses in Indian households: festival spending, annual insurance premiums, vehicle servicing, school admission fees. The mechanics are simple - a separate savings account or recurring deposit, funded monthly, spent only for its stated purpose.
Want this worked out for your own numbers?