What Are Sinking Funds? How to Plan Them in a Budget Spreadsheet

A sinking fund is money you set aside each month for an expense you know is coming, such as car repairs, holiday gifts or an annual insurance bill, so it never hits all at once.

The monthly amount

Monthly = (Goal − Saved so far) ÷ Months until it's due

In a spreadsheet

With the goal in B2, saved in C2 and the due date in D2:

=(B2-C2)/MAX(1, DATEDIF(TODAY(), D2, "M"))

MAX(1, …) stops the formula dividing by zero in the final month.

Common sinking funds

• Car repairs and registration
• Holidays and birthdays
• Annual insurance or subscriptions
• Vet and medical bills
• Home maintenance
• Travel

Make it part of the budget

Treat each monthly amount as a bill in your budget, and move it to a separate savings account on payday. When the expense arrives, the money is already there.