A sinking fund is money you set aside gradually for predictable annual or occasional costs, such as home insurance, motor tax, property tax or Christmas spending. Add up the expected costs, divide the total by the number of pay periods before they are due, and save that amount regularly in a separate savings pot. Review the figures when bills change and keep an emergency fund separate for unexpected expenses. The amount you need will depend on your circumstances, so check bills and payment dates carefully and choose an account that suits your access and savings needs.