Guide, 2026-11-04

Sinking funds: how much to save each month (spreadsheet method)

Many budget "emergencies" are not emergencies at all. The car insurance renewal, the annual software subscription, birthday presents in December: you knew they were coming. A sinking fund is money you set aside a little each month for a known future cost, so that when the bill arrives the money is already there. Here is how to plan them in any spreadsheet.

Sinking fund or savings goal?

A sinking fund has a known cost and a date, and you expect to spend it: insurance, a holiday, a new laptop, school fees. A savings goal may never be spent, such as an emergency fund or a house deposit. For planning, both work the same way: a target, a date and what you have saved so far.

Step 1: List every goal with a target and a date

Go through last year's bank statements and pick out the large or irregular payments. Each one becomes a row: name, target amount, target date and the amount already set aside. For an emergency fund, a common starting point is three to six months of essential living costs.

Step 2: Work out the monthly amount

For each goal: needed per month = (target − saved) ÷ months left. Count months left as the number of monthly deposits you can still make before the date. If the date has passed or the goal is already reached, the amount is zero. In a spreadsheet: =MAX(0, Target − Saved) / MonthsLeft.

Step 3: Compare with what you actually plan to save

Add up the monthly amounts. If the total is more than you can put aside, you have three honest options: move a date later, lower a target, or find the difference elsewhere in your budget. Seeing the gap in numbers is better than discovering it in the month the bill arrives.

Step 4: Check your real pace

Plans are not results. Record every deposit and withdrawal for each goal with a date. Then: actual pace = net deposits ÷ months since you started, and expected months to finish = remaining ÷ actual pace. If the expected finish is later than the target date, the goal is behind.

A worked example

A fictional saver has $2,000 a month of essential costs and three goals:

The arithmetic: ($900 − $180) ÷ 9 = $80; ($1,500 − $300) ÷ 10 = $120; ($6,000 − $2,400) ÷ 18 = $200. The saver plans $350 a month, so the plan is $50 a month short.

Now the real pace. The insurance fund has received $180 over 2 months, or $90 a month, so the remaining $720 takes 8 months: on track. The holiday fund has $300 over 3 months, $100 a month, so the remaining $1,200 takes 12 months, two months late. The emergency fund has averaged $150 a month, so the remaining $3,600 takes 24 months, six months later than planned.

The emergency fund today covers $2,400 ÷ $2,000 = 1.2 months of essential costs. That number is worth watching on its own, because it tells you how long you could manage without income.

Add a simple net worth line

Once a month, list what you own and what you owe. Continuing the example: savings of $2,880 (the three goals), a current account of $1,200 and a retirement account of $14,500 make $18,580 of assets. A credit card of $1,100 and a car loan of $6,400 make $7,500 of debts. Net worth is $18,580 − $7,500 = $11,080. One number per month, charted over a year, shows the direction better than any single balance.

Common mistakes

• Saving one lump sum for "everything", so you cannot tell which goal is behind.
• Spending from a sinking fund for something else and not recording the withdrawal.
• Setting a date and never checking the actual pace against it.
• Forgetting that target costs change: insurance renewals and holidays often cost more than last year.
• Counting expected interest that has not been earned yet. For short goals it is simpler and safer to plan without it.

When a ready-made planner saves time

With two or three goals the sheet above is easy. With ten, plus withdrawals and a monthly net worth history, keeping the pace and expected-date formulas right takes some work. SaveBook does this for up to 30 goals and sinking funds: needed per month, whether your plan covers it, the expected date at your actual pace, the emergency fund in months of expenses and net worth month by month. It does not project interest or investment growth, uses one currency per file and is a planning tool, not financial advice.