Sinking Funds Calculator

A sinking fund is a third kind of saving, distinct from an emergency fund and a budget: it's money set aside on purpose for one specific, dated, foreseeable expense — a car you'll replace on a predictable cycle, an annual insurance premium, a holiday season, a roof with a known lifespan. Because the cost and the rough timing are both knowable in advance, the math is simple division: shortfall divided by months of runway. Skip the habit and the expense doesn't go away — it just gets financed instead, paying interest on money you had months of advance warning to save. This lesson compares the two paths directly: what a sinking fund costs you per month against what financing the same shortfall would cost once the bill actually lands, plus the interest financing adds that saving ahead never does.

Free and interactive — no sign-up, nothing to install. Read the full lesson for the plain-language explanation.