About the Sinking Fund Calculator
A sinking fund is money you set aside in regular instalments for an expense you know is coming — a car replacement, a holiday, insurance premiums, a new roof, holiday gifts or annual tuition. This sinking fund calculator tells you exactly how much to deposit each week, fortnight, month, quarter or year so the fund reaches your target on time, taking into account anything you have already saved and the interest the fund earns.
Households use sinking funds to turn big irregular bills into small predictable ones, which keeps them off credit cards and protects the emergency fund. Businesses and bond issuers use the same maths to retire debt or replace equipment: a fixed periodic payment into an interest-earning account that grows to a set amount.
Deposits are assumed to be made at the end of each period and interest to compound at the same frequency as your deposits, using the nominal annual rate you enter. Set the rate to 0 for a plain cash envelope. A schedule shows the balance after every deposit so you can check you are on track.
With the default inputs, the deposit per period is $481.10. Change any value above to recalculate instantly.
How to use the sinking fund calculator
- 1Enter the amount the planned expense will cost.
- 2Enter anything you have already set aside for it.
- 3Enter how many months until you need the money.
- 4Choose how often you will deposit — match it to your pay schedule.
- 5Enter the savings rate, or 0 for cash, and set up the resulting automatic transfer.
Formula and method
This is the sinking fund (future value of an annuity) formula solved for the payment. FV is the amount you need, PV is what you have already saved, i is the interest rate per deposit period (annual rate ÷ deposits per year) and n is the number of deposits between now and the target date.
First the calculator grows your existing savings to the target date and subtracts that from the goal. The remaining gap is divided by the future-value annuity factor ((1 + i)^n − 1) ÷ i, which is how much a deposit of 1 per period grows to. With a 0% rate the payment is simply the gap divided by the number of deposits. Deposits are assumed at the end of each period.
- PMT
- Deposit per period
- FV
- Target amount
- PV
- Amount already saved
- i
- Interest rate per period
- n
- Number of deposits
Worked examples
$12,000 car fund in 2 years at 4%
With i = 4% ÷ 12 and 24 monthly deposits, the annuity factor is about 24.94, so you need $481.10 a month. You deposit $11,546 and interest supplies the remaining $454.
$6,000 holiday in 18 months, $1,000 saved, biweekly at 4.5%
Eighteen months is 39 biweekly deposits. The $1,000 you have grows on its own, leaving a gap that takes $122.31 every payday. You deposit about $4,770 on top of the starting $1,000, and interest covers roughly $230.
$3,000 of holiday gifts in a cash envelope, weekly
With no interest, the deposit is simply $3,000 ÷ 52 weeks = $57.69 a week.
Frequently asked questions
What is a sinking fund?+
A sinking fund is money saved gradually for a specific, expected expense — such as car repairs, insurance premiums, a vacation or holiday gifts. Unlike an emergency fund, you know roughly how much you will need and when.
What is the sinking fund formula?+
The periodic deposit is PMT = FV × i ÷ ((1 + i)^n − 1), where FV is the target, i the interest rate per period and n the number of deposits. If you already have savings, subtract their future value from FV first.
What is the difference between a sinking fund and an emergency fund?+
An emergency fund covers unexpected costs such as job loss or medical bills. A sinking fund is for planned expenses. Keeping them separate stops predictable bills from draining your safety net.
Where should I keep sinking fund money?+
A high-yield savings account or money market account is common because the money stays safe and accessible while earning interest. Many banks let you create separate named savings buckets for each sinking fund.
How many sinking funds should I have?+
As many as you have large irregular expenses. Common ones are car maintenance and replacement, home repairs, insurance, medical deductibles, travel, gifts, pet care and annual subscriptions. Add up the per-month amounts to set your budget line.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.