The emergency fund and the sinking funds can share a wrapper. A $60,000 Treasury MMF balance earmarked half for emergencies and half for an upcoming tuition bill is fine, provided you have not double-pledged the same dollars against a true emergency in the interim. Combining buckets raises portfolio yield slightly but introduces a real failure mode: a true emergency that arrives in the same week as the planned lump leaves neither covered.
A sinking fund is a dollar pledged against a specific future payment. It is not emergency liquidity until the payment is made and the bucket is refilled. If a true emergency hits the week before estimated taxes are due, the tax-bucket cash is available — but you have just converted a known liquidity event into an emergency by failing to refill before April 15.
Two operational rules. First, label the buckets. Treasury MMF balances are fungible at the custodian; mental accounting has to do the work the wrapper does not. Most brokerages let you hold T-bills in a sub-account or a separately titled position you can name (“2026 Q2 EST”) — use it. Second, run the survival-floor test (section “Sizing the Fund”) on the residual after all sinking-fund pledges are honored, not on the gross balance. A $1,000,000 Treasury sleeve that owes $800,000 to known-lump pledges is $200,000 of usable emergency liquidity, not $1,000,000.