Sinking Fund Calculator

Related Calculators

Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Sinking fund: Money set aside over time for a future cost, such as insurance, a trip, a car repair, or a planned purchase [3].

Goal amount ($): The amount you want available by the goal date. If Price growth (% per year) is used, this should be today's price.

Current savings ($): Money already saved for this same goal.

Number of deposits: The count of deposits you will make before the money is needed, not the number of years.

Annual return (% per year): The expected yearly growth rate of the money, such as a savings APY or an investment return [1].

Return per deposit period: The annual return converted to one weekly, biweekly, monthly, quarterly, or yearly deposit period.

Deposits happen: Whether each deposit is made at the start or end of each deposit period. Start deposits have one extra period to grow.

Price growth (% per year): The expected yearly rise in the goal cost. Use 0 when the Goal amount ($) is already the amount you need on the goal date.

Extra cushion at the goal date: Planned ending balance minus the adjusted target. A positive amount means the plan ends above the goal.

Mistake: Entering a future price in Goal amount ($) and also adding Price growth (% per year).
Fix: If Goal amount ($) is already the future price, leave Price growth (% per year) at 0.

Mistake: Typing years instead of deposits in Number of deposits.
Fix: Count each planned deposit. For one year of monthly saving, Number of deposits is 12.

Mistake: Entering 0.04 in Annual return (% per year) when you mean 4%.
Fix: Enter 4 for 4%. Enter 0 only when the money earns no growth.

Mistake: Choosing How often you deposit as Monthly while actually saving every 2 weeks.
Fix: Match How often you deposit to the real schedule so Save this much each deposit is the right size.

Mistake: Putting unrelated cash in Current savings ($).
Fix: Include only money already set aside for this same sinking fund goal.

Mistake: Leaving Deposits happen at the end of each period when each deposit is made at the start.
Fix: Change Deposits happen to the start option if the money is added right away and gets one extra period to grow.

• The Annual return (% per year) is treated as effective yearly growth, similar to APY. The calculator does not ask for a separate compounding schedule.
• Current savings ($) and all future deposits are assumed to earn the same return.
• The deposit amount is fixed. The calculator does not model skipped deposits, changing deposits, early withdrawals, taxes, fees, or account minimums.
• Price growth (% per year) is applied at a constant yearly rate. Real prices may rise unevenly or fall.
• Weekly, every 2 weeks, monthly, quarterly, and yearly use 52, 26, 12, 4, and 1 deposits per year.
• Save this much each deposit is floored at $0 when Current savings ($) already grows enough to cover the target. Extra cushion at the goal date shows the overage.
• Displayed dollars are rounded for readability, so Extra cushion at the goal date can show a tiny difference from $0 after rounding.

Calculation steps

The calculator first turns How often you deposit into deposits per year:

weekly = 52, every 2 weeks = 26, monthly = 12, quarterly = 4, and yearly = 1.

years = number_of_deposits / payments_per_year

Price growth, if entered, raises the Goal amount ($) to the estimated Target amount at the goal date.

target_at_goal = goal_amount * (1 + price_growth_decimal)^years

The Annual return (% per year) is converted to a Return per deposit period so weekly, monthly, and yearly plans are handled consistently.

periodic_return = (1 + annual_return_decimal)^(1 / payments_per_year) - 1

Current savings are grown for the full number of deposit periods.

future_value_current_savings = current_savings * (1 + periodic_return)^number_of_deposits

The new deposits use the future value of an annuity accumulation factor, which is the standard sinking fund setup for equal deposits [2]. If the periodic return is 0, the factor is just the number of deposits, avoiding division by 0.

factor_end = number_of_deposits when periodic_return = 0

factor_end = ((1 + periodic_return)^number_of_deposits - 1) / periodic_return when periodic_return is not 0

deposit_factor = factor_end for end timing

deposit_factor = factor_end * (1 + periodic_return) for start timing

The required deposit is the remaining future need divided by that deposit factor. It is floored at $0 because this calculator answers how much to save, not how much to withdraw.

required_deposit = max(0, (target_at_goal - future_value_current_savings) / deposit_factor)

The supporting outputs come from the planned ending balance after current savings and new deposits grow to the goal date.

planned_ending_balance = future_value_current_savings + required_deposit * deposit_factor

cushion_at_goal = planned_ending_balance - target_at_goal

total_deposited = required_deposit * number_of_deposits

growth_earned = planned_ending_balance - current_savings - total_deposited

Mini-example

Suppose Goal amount ($) is $5,000, Current savings ($) is $500, Number of deposits is 12, Annual return (% per year) is 4%, How often you deposit is Monthly, Deposits happen at the end, and Price growth (% per year) is 0. Monthly deposits per year are 12, so the plan lasts 1 year. The return per deposit period is about 0.3274%. Current savings grow to about $520. The required fixed deposit is about $366.66 per month. Total you add is about $4,399.91, and Growth earned is about $100.09.