About a month ago, I paid $410 to the USCIS to apply for STEM OPT. The USCIS (United States Citizen and Immigration Service) is a sector of the U.S government that oversees immigration purposes. International students apply to the USCIS for OPT (Optional Practical Training) to be able to legally work in the United States. After their one year of OPT ends, foreign students who studied STEM can apply for an extension of two additional years depending on their field of work. As an international student in the United States, OPT application is an unavoidable expense. It is a bulk expense and also a sinking fund. One of the steps you have to take to prepare for the future as an international student in the United States is saving for Sinking funds.

What Are Sinking Funds?

According to Rachel Cruze from Ramsey’s solution, a sinking fund is a strategic way to save money by setting aside a little bit each month. Sinking funds are basically money that will ‘sink.’ It is money that would be unavoidably spent later on and is saved every month to avoid the inability to pay when the time comes. It also prevents you from dipping into your emergency savings to pay in most situations. Sinking funds are not the same as emergency funds. An emergency fund is used only unpredicted situations but a sinking fund is used for a known future expense. An example of when to use an emergency fund would be if one loses their job. Another scenario would be in this story, where I had to survive on my emergency fund.

How To Save for Sinking Funds

Much like emergency funds, you save up for sinking funds with each pay check. When your receive your paycheck, take out a certain percentage of it and have in a high yield savings account. The amount to save for a sinking fund depends on the purpose of the funds. For instance, if you started saving from January for a Christmas gift sinking fund, then you would save for 12 months. This implies that if you intend to spend $500 in total on Christmas gifts for the year, you would divide that by the number of paychecks you have till December. That would determine the amount that goes into your sinking funds for each paycheck.

Examples of Sinking Funds

A sinking fund could be anything you need in the future. It is often an expensive expenditure that you would almost not be able to afford on the spot if you did not save for it. The major examples of sinking funds include medical bills, yearly gifts (Christmas presents, birthday presents, Valentine gifts), vacations and for international students immigration funds. Ever since I was a sophomore in college, my DSO (Designated School Officer) educated us about the different steps and processes to take to be able to maintain our status in the United States. Therefore as soon as I started working after graduation, I began saving for my STEM OPT application to the USCIS.

Why You should Save For Sinking Funds

The United States is more of an individualistic country. Most African and Asian countries are more family and community oriented. This is not the case in the states. In addition, while others might have families to fall back on if they ever have problems, most international students do not have that option. A lot of immigrants are the back-up for their families in other continents. Most have to pay for their bills in the states and also send money to their families in their respective countries. To prevent surprises, and to always have control over your financial situation, it is recommended to save for emergency fund and for sinking funds. Bad finances can be a detriment to one, and a foreigner in a country is never taught how money works in that country. To build and grow wealth even as a foreign student in United States, be sure to read this post.