What is a sinking fund?

A sinking fund is money you set aside regularly to cover a known future cost, such as annual rates, insurance or car registration. Instead of a big bill landing all at once, you build the money up steadily so it is ready when the bill arrives.

How do I work out my sinking fund amount?

Add up your known yearly costs, then divide by how often you want to set money aside, weekly, fortnightly or monthly. This calculator does that across several costs so you know the single regular amount to put away.

Why use a sinking fund?

It turns lumpy, predictable bills into a smooth, manageable habit, so the big ones never blow your budget or push you into debt. It is one of the simplest ways to take the stress out of irregular expenses.

Sinking Fund Calculator

This calculator works out the regular amount to set aside for the predictable big bills that hit New Zealand households every year, things like council rates, house and contents insurance, and car registration, warrant of fitness and servicing. Rather than being caught out when one of these lands, a sinking fund lets you save toward them steadily so the money is already there when needed. You enter your expected yearly cost for rates, insurance, car running costs, and any other annual expenses such as school fees or subscriptions billed yearly. The calculator adds these together and shows the total to save each year, then breaks that figure down into what to set aside per week, per fortnight and per month, so you can match it to how often you get paid. For example, yearly costs totalling $7,600 work out to roughly $146 a week, $292 a fortnight or $633 a month. Once you have your figure, transfer it automatically into a separate savings account each pay cycle so the cash is ring-fenced and you are not tempted to dip into it. Review the amounts at least once a year, since rates, insurance premiums and vehicle costs tend to rise, and adjust your sinking fund accordingly. These figures are indicative only and depend on your own bills, so plug in your real numbers rather than relying on the examples shown.

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Rates per year

Insurance per year

Car rego, WOF, servicing

Other annual costs

$146

to set aside per week

Per fortnight$292

Per month$633

Total per year$7,600

Set the amount aside in a separate account so it is there when the bills land. Review yearly as costs change. A sinking fund is one of the simplest ways to avoid bill shock. Estimate only.

How it works

The calculator adds up your known yearly costs, then divides the total by the number of weeks, fortnights and months in a year to show the regular amount to put away. Setting that amount aside, ideally in a separate account, means the money is ready when each bill arrives, so a big annual cost never blows your budget or pushes you toward debt.

Worked example

With $3,000 rates, $2,400 insurance, $1,200 of car costs and $1,000 of other annual costs, the total is $7,600 a year. That is about $146 a week, $292 a fortnight or $633 a month to set aside, so every one of those bills is covered when it lands.

Related calculators

Budget Calculator: your whole budget.
Christmas Savings Calculator: save for Christmas.
Car Replacement Fund Calculator: save for a car.
Emergency Fund Months Calculator: your safety net.
Sinking Funds: background on this topic.

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