Sinking Fund Calculator
Calculate the regular contribution needed to build a sinking fund in Australia for a known future expense by a set date.
Your results
Calculation breakdown
- Future value of current savings
- FV of current balance = current savings × (1 + monthly rate)^months
- Required contribution
- Contribution = shortfall ÷ [((1 + monthly rate)^months − 1) ÷ monthly rate]
Worked example
To have $6,000 in 18 months starting from $500 saved and earning 3% p.a., you would need to contribute roughly $302 a month.
Assumptions
- Assumes contributions are made monthly and interest compounds monthly.
- Does not account for tax on interest earned within the sinking fund.
How this calculator works
A sinking fund sets aside regular contributions to cover a known future expense, such as replacing a car, a strata building fund or a big-ticket purchase. Enter the target amount, how many months away it is due and any interest earned, and this calculator works out the regular contribution required.
Frequently asked questions
What is a sinking fund used for?
It's used to save steadily for a predictable future cost, spreading the impact over many pay periods instead of one large hit.
Does interest reduce my required contribution?
Yes, interest earned on the growing balance reduces the size of the regular contribution needed to reach the same target.
How is this different to an emergency fund?
An emergency fund covers unplanned expenses, while a sinking fund is for a specific, known future cost with a target date.
Results are estimates only and are not financial, tax, legal or credit advice.