How Sinking Funds Can Revolutionize Your Money Game

A sinking fund is just a savings account with a mission. Nothing complicated. Think of it as a goal-based savings bucket

Grab your notebook, maybe a hot cup of chai or coffee, and let’s dive into one of the smartest, safest ways to grow your money in Kenya

Let’s be real for a second.
Most of us have financial goals. We say, “This year I’ll save for school fees bila stress,” or “Next December I’ll finally take that holiday, hata Mombasa tu,” or even “One day I’ll upgrade my car or laptop.”

But truth be told, wanting it is one thing and following through is another. That’s where sinking funds come in. And if you hang around with me for the next few minutes, you’ll see how this simple idea can completely change the way you handle money.

So, what exactly is a sinking fund?

Relax. Don’t let the name confuse you.
A sinking fund is just a savings account with a mission. Nothing complicated. Think of it as a goal-based savings bucket

• Saving for school fees? That’s your school fees sinking fund.
• Planning for Christmas or a family holiday? That’s your holiday sinking fund.
• Want to buy a car, upgrade your house, or pay insurance? That too is a sinking fund.

Instead of one big pot where all your money mixes up, a sinking fund allows you to separate savings according to goals. That way, when life happens (and life always happens), you are ready.

Why sinking funds matter (especially in Kenya)

The reason many of us struggle with budgets is not because we are careless with money. It is because we don’t plan for expenses that are predictable but irregular.

Think about it:

• School Fees Not a monthly bill, but it comes three times a year without fail.
• Car Insurance or Service Not monthly, but you know it is coming.
• December Ah, December! The month where money seems to vanish on food, trips, weddings, and “Nairobi is Nairobi” expenses.

None of these are emergencies. But since we don’t set money aside in advance, they catch us off guard. We end up borrowing, taking mobile loans, or even liquidating investments when we shouldn’t.

Saving comes before investing

Here’s the truth: you cannot be a successful long-term investor if you haven’t learned to save.

Why? Because without sinking funds, you’ll keep withdrawing from your investments every time something “comes up.” And once you start interrupting compound interest, you kill its power to grow.

So start here. Save for your short-term and medium-term goals through sinking funds. Then let your investments grow in peace.

How to set up your sinking funds

It’s easier than you think. Step by step:

• List your non-monthly expenses and goals for the year.
  Ask yourself: “What do I need to handle in the next 12 months that requires money?”
  Examples: school fees, insurance, trips, birthdays, even wardrobe updates.
• Estimate the total cost for each goal.
  Example:
  
  • School fees = KSh 165,000
  • Car insurance & service = KSh 60,000
  • Christmas & gifts = KSh 50,000
  • Travel = KSh 40,000
  • Total = KSh 315,000
• Divide by the months left.
  315,000 ÷ 12 = about KSh 26,250 per month.
• Open separate accounts or money market funds.
  Label them clearly: School Fees Fund, Car Fund, Holiday Fund, Lifestyle Fund.
• Automate if possible.
  The less you think about it, the more consistent you’ll be.

🔍 Where to keep your sinking funds

The best option? Money Market Funds (MMFs).

They are safe, protect your capital, and still give you some interest. In Kenya, many people use funds such as CIC, Britam, Sanlam, Zimele, Madison, NCBA, GenAfrica, Absa, Arvocap, among many more.

👉🏽 Pro tip: Always compare interest rates, accessibility, and consistency of returns before choosing which MMF to use.

If MMFs feel a little overwhelming right now, no worries. You can start with a simple savings account as long as you keep each sinking fund separate.

Why this works

When you use sinking funds, you start enjoying three powerful benefits:

• No more fake emergencies. Things like school fees and insurance stop being surprises.
• Peace of mind. You already know December is sorted, so no stress.
• Freedom to invest. Your investments remain untouched because your short-term needs are taken care of.

It’s like training your money to multitask. It pays today’s bills, prepares for tomorrow’s expenses, and still invests for the future.

How sinking funds tie into financial freedom

We encourage the principle of living on 50 percent of your income and saving or investing the other 50 percent. Why? Because that is the fastest path to financial freedom and even early retirement.

Here’s where sinking funds play their role. That 50 percent you save and invest does not all have to go into long-term investments at once. Some of it should go into:

• Retirement Fund (future security)
• Emergency Fund (short-term safety)
• Sinking Funds (for school fees, trips, lifestyle upgrades)
• Investments (wealth building for the long haul)

This way, every shilling has a clear job. Whether it is keeping your kids in school, paying for that December trip without debt, or securing your retirement, you are covered.

The bottom line

Sinking funds are not about making life dull. They are about making money predictable, goals achievable, and your financial journey more peaceful.

When you sit down, list your goals, give them timelines, and attach amounts, you quickly see whether you are living within your means. You also learn to prioritize, postpone, or plan better.

And honestly, that is the beauty of sinking funds. They don’t just help you save. They help you take control of your life.

Ready to take the next step?

We’d love to walk this journey with you. Whether you need help setting up sinking funds, building a balanced portfolio, or simply gaining clarity in your financial goals, we are here.

👉🏽 Join our membership community where we share tools, strategies, and even spiritual encouragement for your money journey.
👉🏽 Download our budget tracker and other financial tools to start structuring your sinking funds today.

Because financial freedom is not for “other people.” It is for me, you, and every Kenyan willing to plan, save, and invest with intention.

Want to Go Further, Faster? Join the Kingdom Finance Family!

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This isn’t just a membership it’s about fulfilling the call of God to finance His work.

"Your money deserves to work as hard as you do."

Janet Kilalo, Chief Executive Officer