The term can describe savings with a relatively specific end goal or target, however, it can also include general savings funds for a specific category.

A Specific Goal Example

Car Insurance is due every 6 months and costs $810. You can customarily pay this in monthly increments but there is oftentimes an added fee to do so. Pay it every 6 months or annually for the best price.

Set your money aside like this:

$135 per month for 6 months.

$32 per week for 26 weeks.

$62 per paycheck if you are paid biweekly.

When your category is funded the bill is due. Pay it. The next month start your incremental savings to pay for the bill in 6 months.

General Savings Goal Example

A Sinking Fund for Home Maintenance. The Rule of thumb would have you save 1% of your home value in this fund annually. If you had a $200,000 home you would need to save $2,000 each year.

Set your money aside like this:

$166 per month for 12 months.

$38 per week for 52 weeks.

$77 per paycheck if you are paid biweekly.

Home Maintenance doesn’t have an end goal and most months you might not spend from this category. The goal would be to have money in the fund and available to you when the fence is blown down from a windstorm or you accidentally back your car into the garage door.