Sinking funds: a worked example for irregular bills

Last updated: 15 October 2026 · By Quicksloth

Some bills don't come every month: the car insurance every six months, Christmas once a year, a car repair whenever the car decides. A sinking fund turns each of them into a small monthly amount, set aside ahead of time, so the bill is already paid for when it arrives. Here is one household's plan worked out with real numbers: the setup in January, and a check-in three months later with a skipped month and a repair paid from a fund.

Short version: for each bill, take what's still missing and divide it by the months left until it's due. In this example four funds need $400 a month, or $200 from each of two paychecks. Three months later, one skipped transfer and one repair change the plan by $6 a month.

This is a worked example of a calculation, not financial advice. Your own bills and dates will be different.

The one rule

For each fund you need three numbers: the goal (what the bill will cost), the due date and what you have already set aside. Then:

• Still needed = goal − saved so far (never below zero).
• Months left = calendar months from this month to the month it's due. A bill due on 1 July, seen in January, has 6 months left: you set money aside in January, February, March, April, May and June.
• Per month = still needed ÷ months left.
• Per paycheck = per month × 12 ÷ the number of paychecks in your year.

Because the plan always divides what's still missing by the months still left, it corrects itself: skip a month and the next months ask a little more; put in extra and they ask a little less.

The plan in January

A made-up household sets up four funds on 15 January 2027. They are paid twice a month (on the 15th and the last day), so 24 paychecks in the year.

So the household moves $400 a month into its funds: $200 from each paycheck. The $300 already in the car repair fund counts from day one, which is why that fund only needs $100 a month.

A car repair has no real due date. Picking one anyway (here: before winter) is what turns "someday" into a monthly number.

Three months later

On 15 April the household has made its transfers on 16 January, 16 February and 16 March, with one exception: the subscriptions transfer was forgotten in February. In March the brakes needed $180, paid with money from the car repair fund. Here is the plan, recalculated:

• The funds on track ask the same as before. Car insurance: $540 still needed over 3 months is still $180. Christmas: $720 over 8 months is still $90.
• The skipped month is spread out, not doubled. Subscriptions should have $90 by now and has $60. The missing $30 is shared by the 5 months left: $36 a month instead of $30, not $60 next month.
• The repair doesn't change the car repair plan. The fund has received $600 of its $1,200, so it still needs $600 over 6 months: $100 a month. What changed is the money in it: $420, not $600.

Spending from a fund without counting it twice

This is where many budgets go wrong. The $100 a month for car repairs already left the budget when it was set aside: in January, February and March it was counted as money saved. If the $180 brake bill is then also written down as a new expense, the same money is counted twice, and the month of the repair looks $180 worse than it was.

So the brake bill goes against the fund, not against the month: in the fund now = saved − spent from fund, $600 − $180 = $420. The monthly budget doesn't see it at all.

The other common slip is spending more than the fund holds. If the brakes had cost $700, the fund would show −$100: the extra $100 came from somewhere else and belongs in the month's spending, not in the fund.

Refill the fund, or not

After the repair, the household has a choice, and the numbers make it concrete:

• Keep the goal at $1,200. The plan stays at $100 a month, and by October the fund will have received $1,200 in total. With the $180 already spent, $1,020 will be in it.
• Raise the goal by what was spent, to $1,380. Still needed becomes $780; over 6 months that's $130 a month, $65 per paycheck. By October the fund holds $1,200 again.

Neither is wrong. A fund for one known bill (insurance, Christmas) usually just runs to its date and is used up. A fund for things that keep happening (car repairs, the vet, the house) is often topped back up.

What this example assumes

• One transfer per fund per month, made after payday. Splitting it across two paychecks gives the same total.
• Months are counted by calendar month, not by days: on 15 April, a bill due on 1 July has 3 months left (April, May, June). In the due month itself, the whole amount still needed is due.
• Per-month amounts are rounded to the cent. With twice-a-month pay there are 24 paychecks; paid every 2 weeks there are 26, or 27 in some years, so the amount per paycheck is a bit smaller than half the monthly amount.
• The funds sit in an account you don't spend from day to day. Interest, if any, is left out.

Try it with your own bills

Our Budget Planner has a Sinking Funds tab that does exactly this for up to 20 funds, and a Savings Goals tab with the same engine for 10 longer goals like an emergency fund. Type a name, a goal, a due date and what you already have; to add money, write a transaction with the fund's name as its category; when you pay for something with it, type the amount in Spent from fund, not in Transactions. The tab shows Saved, In the fund now, Still needed, Months left, Per month and Per paycheck (from your pay frequency), a progress bar and a status (Saving, Funded or Past due), and its Check column says "Spent more than saved." when a fund goes below zero. It works in Excel and Google Sheets and is coming soon to our Etsy shop.

Paying off debt at the same time? See Debt snowball vs avalanche: same debts, two plans.

Not financial advice. The calculation shows how much to set aside under the assumptions above; it doesn't know your income, your other goals or what your bills will really cost.