In personal finance, an account used to save for a planned future expense is called a sinking fund.
A sinking fund spreads the cost of a known or anticipated bill over time. A household might set aside money each month for annual insurance, holiday spending, vehicle repairs, tuition, or a home replacement project. If a $1,200 expense is due in 12 months, saving $100 per month is a simple target before considering interest.
The concept originated in finance as a reserve established to repay debt or replace an asset. Governments and companies have used sinking funds for obligations such as bond repayment. Household budgeting applies the same forward-planning idea to irregular expenses.
A sinking fund differs from an emergency fund. The former is earmarked for a foreseeable goal, while the latter is intended for unexpected financial shocks. Keeping separate categories can make it easier to see whether money is available for a planned bill without confusing it with money reserved for emergencies.