Why now is the perfect time to start saving for Christmas 2026!

It’s a whole year until Christmas 2026! And yes, now is a good time to start thinking about planning for it!! I know, you must be thinking: “we’re not yet even done with 2025 and she wants us to think about Christmas a whole year from now?”

Hear me out. Every year, many of us get caught off guard by Christmas expenses: gifts, food, travel, outfits, and family gatherings. We end up dipping into our emergency savings and investments if we have them or taking out loans just to make the season happen. And then we feel the pinch even more in January as the school fees period draws near.

This cycle is predictable, stressful, and absolutely avoidable.

And that’s where the concept of  sinking funds comes in.

 What is a sinking fund?

A sinking fund is money you set aside little by little for a specific expense you know is coming. Unlike a general savings account, a sinking fund has a specific purpose, like Christmas spending, school fees, a new fridge, or car repairs.

The term “sinking fund” originally referred to funds set up by corporations or governments to repay debt, over a period before the maturity date. It is based on the idea that the fund helps to “sink” (reduce) debt.

 Here’s how a sinking fund works.

Instead of scrambling for money when a bill or event comes up, you save small amounts over time:

1. Decide what you’re saving for. In this case we know the goal: Christmas 2026.
2. Figure out how much to save. Let’s say you want to spend UGX 2,400,000 on Christmas 2026.
3.   If you start in January 2026, you’ll have 12 months to save.

• UGX 2,400,000 ÷ 12 months = UGX 200,000/month
• By putting aside UGX 200k each month, you’ll have your full budget ready by December 2026.
• Starting early (now, in 2025) allows you to plan and spread out savings over time. 

4.  Choose where to keep it. Keep the money somewhere that’s accessible when you need it but again not too accessible that you can spend it. A unit trust account is a good option because it also earns you interest.
5.  Put it in your budget. Treat your sinking fund like any other monthly bill so you stay consistent. Just as you automatically pay your rent or utilities each month, take your sinking fund contribution out as soon as you get paid and send it to the savings account.

Benefits of sinking funds

• Help avoid debt. By planning ahead and saving systematically, you can avoid turning to borrowing for predictable expenses that you know are going to happen.
• Add structure to your savings. By giving every shilling a job, you protect your budget and investments from being drained. For instance, by creating a special fund for Christmas spending you avoid dipping into money that should be going towards school fees in the new year.
• Boost financial confidence. Having money earmarked for future expenses gives you peace of mind and control over your finances.
• Remove guilt around big spending. Because you planned in advance, when the time comes to spend, you’ll do it confidently, knowing the money is already there.
• Promote  discipline. Sinking funds encourage disciplined saving habits. By making regular, small contributions to your sinking funds, you develop a consistent saving routine. This discipline not only helps you seek your specific financial goals but also fosters healthy financial habits that can benefit your overall financial management.

 So… does planning for Christmas 2026 still sound crazy? Probably not!

 And while we are here, below are other expenses you can use sinking funds for:

• Gifts and celebrations (birthdays, anniversaries), car or home repairs
• Appliances or furniture
• Travel and vacations
• Pet care

Whatever it is, knowing you already have the money set aside makes life a whole lot less stressful.

By Martha songa

miss.songa@gmail.com