Many bonds now have a sinking fund managed by a trustee who oversees the fund. Money is set aside periodically with a trustee for repayment of the portion of the principal.
An emergency fund is for the money you set aside in a savings account for unexpected costs you may face when losing a job, boiler breaks, a medical necessity, or pet surgery.
The sinking fund is for saving money for a known purpose you expect to purchase in the future. Typically, your sinking fund is for a specific planned amount.
2. List Your Planned Purchases
Make a list of fund categories, break them down into more specific items. Then determine the target amounts for each. Name your sinking fund by its discreet type.
3. Where Your Savings Will Go For Purchases
You can open an FDIC-insured saving account for each type or have one large sinking fund with named sub-accounts.