Sinking Funds Tracker: How to Set One Up (UK Example)
This guide shows you how to set up a sinking funds tracker from scratch, using a worked UK example: nine typical costs, the monthly amount for each, and the total to put aside. A sinking fund is money you save a little at a time for a specific, expected expense, so when the bill arrives, it’s already paid for.
Instead of being blindsided by Christmas, the car service or the annual insurance renewal, you set aside a little each month for each one. It’s one of the simplest budgeting ideas there is, and one of the most useful, because it stops predictable costs from wrecking your month or pushing you onto a credit card.
Sinking fund vs emergency fund
People mix these up, but they do different jobs. An emergency fund covers the unexpected, such as a job loss or a boiler breakdown. A sinking fund covers the expected but irregular: the MOT, the family holiday, birthdays and the annual insurance bill. You want both. The emergency fund is your safety net, and sinking funds are your plan for life’s predictable big-ticket moments. For how much to keep in the safety net, see how much to keep in an emergency fund.
Why sinking funds work
The trick is turning a scary lump sum into a small, painless monthly amount. A £600 Christmas in December feels impossible in one go, but starting in January, that’s just £50 a month. By the time December arrives, it’s handled, and you haven’t touched a credit card.
That’s the whole point: no surprises, no debt, no January regret.
The 12 categories people forget
Beyond the obvious holiday and Christmas pots, these are the ones that catch people out:
- Car: MOT, service, tyres, repairs
- Annual insurance renewals (car, home, pet, life)
- Christmas & gifts (the big one)
- Birthdays & celebrations
- Holidays & travel
- Home maintenance & repairs
- Medical & dental (check-ups, glasses, excess fees)
- Vet bills & pet care
- Annual subscriptions that renew in one hit (software, memberships, Amazon Prime)
- Back-to-school / kids’ costs
- Tax bills (if you’re self-employed) or other annual dues
- Tech replacement: phone, laptop, white goods that won’t last forever
Most people only budget monthly, and these irregular costs are exactly what blows the budget. A sinking fund for each turns them into a planned, manageable line. Look back over your last year of bills and spending: any cost that appeared once and hurt is a good candidate for its own fund.
Set up your sinking funds tracker in three steps
- List every goal with a target and a due date. Use the list above as a checklist and keep only what applies to you. Write down the amount you expect to pay and the month it falls due.
- Divide each target by the payments you have. Count the monthly payments from the start of your plan up to and including the due month. A £400 car service due in August, with payments starting in January, has eight payments, so it needs £50 a month.
- Give each fund its own named pot. A separate savings pot or sub-account keeps the money from being spent by accident.
Then top each fund up on payday, and draw from it when the expense lands, without guilt, because you planned for it. If saving towards a fixed amount is new to you, how to save for a goal covers the basics, and budget by payday shows how to time each top-up.
Worked example: nine funds for one year
This example starts in January with nothing saved. All figures are illustrative, not a quote for any real costs, but the method is the same whatever your numbers are. The table shows what a sinking funds tracker would calculate for each fund.
| Fund | Target | Due | Payments | Monthly amount |
|---|---|---|---|---|
| Car service and MOT | £400 | August | 8 | £50.00 |
| Annual insurance (car, home, pet) | £660 | October | 10 | £66.00 |
| Christmas and gifts | £600 | December | 12 | £50.00 |
| Birthdays and celebrations | £240 | June | 6 | £40.00 |
| Summer holiday | £1,400 | July | 7 | £200.00 |
| Vet and pet care | £180 | May | 5 | £36.00 |
| Annual subscriptions | £132 | March | 3 | £44.00 |
| Tech replacement (phone, laptop) | £660 | November | 11 | £60.00 |
| Medical and dental | £180 | September | 9 | £20.00 |
| Total | £4,452 | £566.00 in January |
Payments count from January up to and including the due month, so each monthly amount is the target divided by that number. Reading the table: all nine funds are running from January to March, so you put aside £566 a month in total. The monthly figure falls as each fund is paid for. In April the £44 subscriptions fund is complete, so the total drops to £522, and by December only the £50 Christmas fund is still being topped up. Each fund reaches its target by its due month, so the £4,452 is covered without a credit card.
If £566 is more than you can spare, don’t panic. Lengthen the deadlines or lower the targets, and the monthly amounts change straight away. Start with the two or three funds that hurt most last year, and add the rest as you go.
How to do it in the planner
Paper works, but the hard part is keeping several funds straight: what you’ve saved, what’s left and whether each deadline is on track. Our Sinking Funds Tracker for Google Sheets (£9.99, one-time purchase) does that for you. Set a goal, amount and deadline for each fund, and it works out the monthly amount and tracks your progress for every one. It runs in your own Google Sheet on any device, so there is no software to install, and nothing is linked to your bank. An optional AI coach is available if you want it, and it only sends figures and first names to the AI provider, never the full picture, and never to us.
Want to check one fund first? The free sinking fund calculator takes a goal and a deadline and gives you the monthly amount, with no sign-up. If you’d rather have your budget, bills, sinking funds and debt payoff in one place, the All-in-One Budget Planner includes sinking funds too.
Frequently asked questions
What’s the difference between a sinking fund and savings?+
A sinking fund is savings with a specific purpose and deadline (e.g. £600 for Christmas by December). General savings have no set target or date.
How many sinking funds should I have?+
As many as you have predictable irregular expenses. Start with the few that have hurt you before (car, Christmas, insurance) and add more over time.
Where should I keep the money?+
In a separate, named savings account or pot so it isn’t spent by accident. Many banks let you create sub-accounts or "spaces" for exactly this.
How much should I put in each month?+
Divide each goal by the number of monthly payments before it is due. The free sinking fund calculator does this for one goal, and the tracker works it out for every fund.
General information only, not financial advice.