Sinking funds spreadsheet
Car insurance, holidays, birthdays, back to school. You know they are coming. A sinking fund turns each one into a small monthly amount.
What a sinking fund is
A sinking fund is money you set aside every month for a specific, predictable expense that does not happen every month. When the bill arrives, the money is already there and your monthly budget does not take a hit. It is different from an emergency fund, which is for things you cannot predict.
The formula
monthly contribution = (target amount − already saved) ÷ months until you need it
Examples with made-up numbers
Car insurance due in October, 720, nothing saved, 10 months → 72 per month
Holidays in December 2027, 1,200, 0 saved, 12 months → 100 per month
New laptop in 18 months, 1,080, 180 saved → 50 per month
Sinking funds most households need
- Annual bills: insurance, registration, memberships, annual software.
- Holidays and gifts: December, birthdays, weddings you are invited to.
- Travel: next summer's trip.
- Car: tyres, servicing, repairs you know will come.
- Home: appliances, repairs, furniture.
- Kids: back to school, activities, camps.
- Health: dental, glasses, deductibles.
Start with three or four. Too many funds at once makes each contribution tiny and the whole thing hard to keep.
The spreadsheet
One row per fund with these columns: name, target, due date, saved so far, months left, monthly contribution, and status.
months left = DATEDIF(TODAY(), due date, "m")
monthly contribution = (target − saved) ÷ MAX(1, months left)
status = IF(saved >= target, "READY", "")
The total of the contribution column becomes one line in your monthly budget. In a zero-based budget, each fund is simply one more category.
Where to keep the money
You can keep all funds in one separate savings account and track the split in the spreadsheet; you do not need one bank account per fund. What matters is that the money is apart from your everyday account so it does not get spent by accident.
When you spend from a fund
Log the withdrawal, reset the target for next year and the contribution recalculates. If the bill was bigger than the target, raise next year's target by the difference.
Start before the holidays
If you start a holiday fund in January, December 2027 becomes twelve small contributions instead of one big card statement. For this year's holidays, see the holiday gift budget, and for the bigger picture, the New Year budget for 2027.
A worked year
Say you start in January with four funds: car insurance (72 per month), holidays (100), birthdays (40) and car maintenance (35). That is 247 per month as one line in your budget. In October the insurance is paid from its fund and that contribution drops to zero until you reset the target. In December the holiday fund has 1,200 ready. No single month carries the full weight.
If a month is tight, lower one contribution and raise it later; the formula tells you the new monthly amount.
Give each fund a clear end date and amount. A fund without a target tends to become a general savings pot and stops doing its job.
Frequently asked questions
What are sinking funds?
Money set aside every month for a specific, predictable expense that does not happen monthly, such as insurance, holidays or car maintenance.
How do I calculate a sinking fund contribution?
Target amount minus what you already saved, divided by the months until you need it.
Is a sinking fund the same as an emergency fund?
No. A sinking fund is for known, planned costs. An emergency fund is for unexpected ones, like a job loss or an urgent repair.
General information, not financial, tax or legal advice. Examples use made-up numbers.
Personal Finance Planner
Log income and expenses, set a monthly budget per category and track savings goals in one spreadsheet.