| Cost | Amount | Months until due | Set aside a month | Remove |
|---|---|---|---|---|
| ₹1,500 | ||||
| ₹1,900 | ||||
| ₹1,500 | ||||
| ₹1,400 |
- Set aside a month
- ₹6,300₹75,600 a year
Each amount is rounded up to the nearest ₹100, so you’ll have a little more than you need when the bill comes.
What a sinking fund is
It’s money you save a little at a time for a cost you know is coming. Not a surprise, just a bill that doesn’t arrive every month: health insurance, vehicle insurance, school fees, Diwali, a wedding in the family, a new phone.
Pay one of those out of a single month’s salary and that month falls apart. Split it over the months before it’s due and it becomes a small, steady amount you barely notice.
An example
Here’s the starting list from the calculator above:
| Cost | Amount | Due in | A month |
|---|---|---|---|
| Health insurance | ₹18,000 | 12 months | ₹1,500 |
| Diwali | ₹15,000 | 8 months | ₹1,900 |
| Vehicle insurance | ₹9,000 | 6 months | ₹1,500 |
| New phone | ₹24,000 | 18 months | ₹1,400 |
| Total | ₹66,000 | ₹6,300 |
₹6,300 a month covers ₹66,000 of costs. Each amount is rounded up to the next ₹100, so you end up with a little extra. Diwali gets ₹15,200 by the time it comes, not ₹15,000.
Sinking fund vs emergency fund
An emergency fund is for things you can’t plan. A sinking fund is for things you can. Keep them apart. If your insurance renewal comes out of the emergency fund, that money isn’t there when you lose a job or land in hospital. Size the other one with the emergency fund calculator.
Where to keep the money
Somewhere you won’t spend it by accident. A separate savings account works. So does a recurring deposit that matures around when the bill’s due. Move the monthly amount the day your salary lands, the same way you’d pay rent.
Keeping it going
When a bill’s paid, reset it for next year so the monthly amount stays steady. Add new costs as you find them. If something’s due next month and you haven’t started, the calculator shows the whole amount as one month’s set-aside. That’s the sign to start earlier next time.