- A sinking fund is for the expenses you can predict; an emergency fund is for the ones you cannot. Keeping them separate stops one funding the other.
- Each goal costs (what is left) ÷ (months remaining), so the earlier you start, the smaller every month is.
- The monthly total steps down as goals come due — budget against the schedule, not against the first month.
- Keep the money in a savings account, not invested: it is being spent within months, so growth is not the point and a drawdown would be.
How the sinking fund calculator works
A sinking fund is money set aside a little at a time for an expense you already know is coming: a car service, an insurance renewal, a trip, a new laptop. It is the opposite of an emergency fund, which is for the expenses you cannot predict.
The calculator takes each goal as three numbers — what it costs, what you have already put aside, and how many months until you need it — and divides the remainder evenly over the months remaining. Add them up and you get one figure: what to move out of the checking account every month so none of these expenses is ever a surprise.
The schedule below is the part worth reading. The total is not flat. Every goal drops out the month it comes due, so the monthly cost steps down over time — and budgeting against the first month’s figure quietly overstates every month after the first goal is paid.
The math
Monthly contribution per goal = (total needed − already saved) ÷ months until needed, floored at one month so a goal due immediately asks for the whole remainder rather than an impossible number. A fully funded goal contributes nothing.
The monthly total is the sum across goals for that month, and a goal stops contributing after its due month. Summing any goal’s column over the whole schedule returns exactly what it still needed, which is the arithmetic check the table is built to satisfy.
No investment return is applied. A sinking fund is spent within months, so the money belongs in a high-yield savings account rather than in the market — the interest is real but rounds away against the contribution, and assuming growth on money you are about to spend is how a plan quietly ends up short.
Worked example
Three goals: $1,800 of car maintenance due in 6 months with $300 already saved, $3,000 of holiday travel in 10 months with nothing saved, and a $1,200 insurance renewal in 4 months with $400 saved. That is $250, $300 and $200 a month — $750 in total, against $5,300 still to save.
The schedule shows what the single figure hides. Months 1 to 4 cost $750. Once the insurance renewal is paid, months 5 and 6 cost $550. From month 7 only the travel goal is left, at $300 a month. Anyone who budgeted $750 a month for the whole ten months would have set aside about $2,200 more than the goals actually required.
Key terms
- Sinking fund
- Money accumulated in advance for a known, dated expense, so the bill is already paid for by the time it arrives.
- Goal horizon
- The months until the money is needed. It is the divisor in every contribution, which is why starting early is the only lever that costs nothing.
- Irregular expense
- A cost that is predictable but not monthly — annual insurance, property tax, car servicing, holidays. These are what sinking funds exist for.
- Step-down
- The drop in the monthly total when a goal comes due and stops contributing. It is why a sinking fund gets cheaper the longer it runs.