One reason behind the budgeting-spending disconnect could be the assumption that planning ahead looks the same for all expenses. It doesn’t. For large, predictable expenses, like holiday expenses, one solution is a sinking fund — money saved and earmarked for specific purchases.
The three types of expenses
Thinking about how frequent and predictable an expense is can help you decide how to plan for it.
3. Finally, there are the expenses that can wreck your budgeting process. They are generally more predictable than emergencies but less so than recurring spending, and they don’t occur often. Examples include:
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Replacing a roof, a furnace or another major component of a home.
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Buying a new vehicle when your current vehicle no longer works for you.
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Going on vacation.
Because the actual purchase may be many months or years away, it’s easy for these expenses to sneak up on you. But taking advantage of this time is crucial as they tend to be costly.
Missing your window to save for big-ticket purchases is a common oversight. Thirty-five percent of Americans say their 2025 holiday spending was financially irresponsible (e.g., they took on debt or overspent), according to a SS survey conducted online by The Harris Poll in January 2026.
A sinking fund is another name for money you save a little bit at a time for a specific purchase in the future.
Instead of thinking of these expenses as large one-time purchases, translate them into a monthly expense — a money cadence most people are more accustomed to. Breaking it into smaller chunks also minimizes the intimidation that may come with focusing on a large dollar amount, transforming it into something more manageable.
For holiday expenses, start with what you spent last year and divide it by the time you have to save. If you spent $1,500 and start saving for next year in February, you’ll need to save $136 each month for 11 months to reach that savings goal.
Starting a sinking fund has an added benefit: The planning process can alert you to potential overspending before it happens. If you discover your monthly budget can’t accommodate contributions to a sinking fund, you certainly won’t be able to afford the purchase later without using debt.
Delaying, downsizing or rethinking future purchases well ahead of time allows you to make financial decisions with confidence. If you discover you lack the savings when you’re already in the checkout line, your emotions may overwhelm you to spend money you don’t have.
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