Sinking Fund Calculator
Calculate monthly save needed to hit a future expense — car, wedding, home down payment. Standard zero-based budgeting technique.
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| Interest Earned at APY | — |
A sinking fund is a savings sub-account dedicated to a specific future expense — wedding, car replacement, home down payment, vacation, holiday gifts. Setting up sinking funds prevents using emergency fund or credit card for predictable expenses. Best held in high-yield savings (4-5% APY in 2026). Source: YNAB Zero-Based Budgeting, Ramsey Baby Steps.
Why Sinking Funds Work
Sinking funds work by converting an unexpected lump-sum expense into a predictable monthly line item. The car replacement nobody plans for becomes a $400/mo line item over 4 years. The vacation becomes $150/mo. Total saving discipline goes from "find $4,800 somehow" to "plan for $200/mo across these 3 known categories" — much easier psychologically and operationally.
Where to Park Sinking Funds
High-yield savings account (HYSA): 4-5% APY in 2026 at Marcus, Ally, SoFi, Discover. FDIC-insured, no risk, instant access. For 24+ month timelines, consider 1-year Treasury bills (currently 4-5% with state tax exemption — better than HYSA in CA, NY, IL). For 5+ year timelines, consider conservative balanced fund (Vanguard LifeStrategy Conservative Growth) — accept some volatility for better returns.
Common Sinking Fund Categories
Standard list: holiday gifts ($1,500-3,000/yr), birthdays/anniversaries, annual insurance premium (paid yearly typically), car maintenance ($1,200/yr), vehicle replacement ($3,000-6,000/yr), home maintenance (1% of home value/yr), medical out-of-pocket, vacations, large appliances ($500/yr). Set up 8-12 sub-accounts at a HYSA bank to keep each visible separately.
Last updated May 2026. Sources: YNAB — Sinking Funds Method, CFPB — Savings.