Pros:
– Sinking funds provide a structured approach to saving money and being financially prepared. – They can help you anticipate and cover both expected and unexpected expenses.
– By using sinking funds, you can avoid dipping into your emergency fund or going into debt.
– They encourage better financial planning and help you stay on track with your financial goals.
– Sinking funds give you peace of mind knowing that you have funds set aside for specific purposes.
Cons:
– Sinking funds require discipline and commitment to consistently save money.
– It may take time to build up enough funds in each sinking fund, especially for larger expenses. – Prioritizing which sinking funds to allocate your money to can be challenging.
– There is a risk of underestimating expenses and not saving enough in certain sinking funds.
– Sinking funds may not be suitable for those living paycheck to paycheck or struggling with debt.
Note: The topic of this conversation seems to be a success story relating to a Gen Zer paying off debt and securing her financial future. However, the given statement is about sinking funds, which is a financial tool rather than specific advice on how the Gen Zer achieved their goals.
context: https://www.businessinsider.com/personal-finance/berna-anat-sinking-funds-save-money-2023-10
According to author Berna Anat, sinking funds are a helpful tool to prepare for both expected and unexpected expenses in life.
