Sinking Fund Calculator
How much should you set aside each month? Calculate deposits for a single goal, manage multiple sinking funds with the envelope method, or track your progress across all funds. Works with any currency.
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How to Use This Calculator
Tab "Single Fund"
Enter your target amount, the deadline in months, and the annual interest rate on your savings account. The calculator shows exactly how much you need to deposit each month, plus how much interest you earn along the way. If your account earns no interest, set the rate to 0.
Tab "Multiple Funds"
Add up to 5 sinking funds, each with its own name, target amount, and deadline. All funds share the same interest rate. The result shows the monthly deposit for each fund and your total monthly commitment across all goals. This is the envelope method in action.
Tab "Envelope Dashboard"
Enter the same funds as in the Multiple Funds tab, plus how many months you have been saving. The dashboard shows a progress bar for each fund: percentage funded, amount saved, months remaining, and which fund completes first. Use this to check whether you are on track.
The Formulas
Deposit = Target / [((1+r)n − 1) / r]
where r = annual rate / 12 / 100, n = number of months
Monthly deposit (no interest):
Deposit = Target / Months
Interest earned:
Interest = Target − (Monthly Deposit × Months)
Future value of deposits (for progress tracking):
FV = Deposit × [((1+r)elapsed − 1) / r]
Progress percentage:
Progress = FV / Target × 100
All calculations are universal and pre-tax. Interest compounds monthly. Results are estimates based on a fixed rate.
Worked Examples
Example 1 — Single fund: $3,000 holiday in 12 months at 4.5% APY
You want to save $3,000 for a holiday in 12 months. Your high-yield savings account pays 4.5% APY.
Interest saves you about $71 compared to a zero-interest account, where you would need to deposit $250/month.
Example 2 — Three envelope funds at 4.5% APY
You manage three sinking funds simultaneously: holiday travel ($3,000 in 12 months), a new laptop ($1,500 in 6 months), and car insurance ($1,200 in 10 months).
The laptop fund has the shortest deadline, so it requires the largest per-dollar deposit. By splitting goals into separate envelopes, each fund is fully funded exactly when needed.
Example 3 — Dashboard check after 4 months
Using the same three funds from Example 2, you check progress after 4 months of consistent deposits.
The laptop fund is furthest ahead because it has the shortest timeline. All three funds are on track to reach their targets on time.
Understanding Sinking Funds
What Is a Sinking Fund?
A sinking fund is a dedicated savings bucket for a specific future expense. Unlike an emergency fund (which covers unexpected costs), a sinking fund is for planned, predictable expenses like annual insurance premiums, holidays, car maintenance, or property taxes. You know the amount and the deadline, so you can calculate the exact monthly deposit.
Sinking Fund vs Savings Goal
A savings goal is typically one target: save $10,000 for a down payment. A sinking fund system manages multiple simultaneous goals with different deadlines. This is the key difference. The envelope method lets you run 3-5 sinking funds in parallel, each funded independently, so no single large expense catches you off guard.
The Envelope Method
Originally, people used physical envelopes to divide cash into spending categories. The modern sinking fund envelope method applies the same principle to savings: each goal gets its own sub-account or mental bucket. Every month, you deposit the calculated amount into each envelope. When the deadline arrives, the money is ready. No borrowing from one goal to fund another.
How Interest Helps
Even modest interest rates reduce your total deposits. At 4.5% APY on a 12-month, $3,000 goal, interest covers about $71 of the target. That means depositing $244/month instead of $250. Over multiple funds and longer timelines, the savings add up. Use a high-yield savings account to maximise this benefit.
Common Sinking Fund Categories
Popular sinking fund categories include: annual insurance (car, home, health), holiday travel, car maintenance and repairs, home repairs, gift-giving seasons (Christmas, birthdays), property taxes, tuition, and technology upgrades. Start with the 2-3 expenses that cause the most financial stress when they arrive unexpectedly.