--- title: "Sinking Funds: Save Monthly for Yearly Bills | MCC Solutions" description: "What a sinking fund is, how to work out the monthly amount, and a worked example that turns three yearly bills into one steady number." url: "https://mcc-solutionsnj.com/tools/guides/sinking-funds-explained" --- Guide · Updated October 31, 2026 # Sinking Funds: Save Monthly for Yearly Bills A sinking fund is money you set aside each month for a cost you know is coming but don't pay monthly: insurance billed twice a year, car registration, holidays, a new phone. When the bill arrives, the money is already there. By [Matthew Coleman](/about), MCC Solutions Want this tracked every month? Wrenfold keeps your budget on your own device. [See Wrenfold](/personal-finance) ## Find the bills that ambush you Go through the last twelve months of statements and list everything that was not a monthly bill: insurance, registrations, memberships, school costs, gifts, repairs. Those are your sinking funds. ## Worked example Car insurance $1,380 a year, registration $84 and holidays $900 come to $2,364 a year. Divided by 12, that is $197 a month. If a bill is due sooner than twelve months away, divide by the months left instead. A $600 bill due in 4 months needs $150 a month until then. ## Where to keep the money A separate savings account keeps it out of daily spending. One account with a list of what each dollar is for works fine; you don't need an account per fund. ## Sinking fund or emergency fund? A sinking fund is for costs you can predict. An emergency fund is for the ones you can't, like a job loss or a medical bill. Keep them apart so planned costs never drain your safety net. ## Try the calculator Run your own numbers in the free [sinking fund calculator for yearly bills](/tools/sinking-fund-calculator-for-yearly-bills). It works in your browser and nothing you enter is saved or sent. ## Do it in Wrenfold Wrenfold's bill calendar and savings goals let you set each yearly bill's amount and due date and see how much to set aside each month. Wrenfold is the budgeting app we make. Your data stays in a file on your own device, and you can try it free in your browser with up to 60 entries. [Try Wrenfold free](/money/app/) [More budgeting guides](/tools/guides/budgeting) ## Sources - [CFPB: How to create a budget and stick with it](https://www.consumerfinance.gov/archive/blog/budgeting-how-to-create-a-budget-and-stick-with-it/) ## Common questions **How many sinking funds should I have?** As many as you have predictable non-monthly costs. Most households have five to ten. **What if I can't fund them all?** Fund the biggest and soonest first, then add the rest as room opens up. **Should sinking funds be in a separate account?** It helps. A separate savings account, or labelled sub-accounts if your bank offers them, keeps the money from blending into everyday spending. This guide is general information, not financial, tax or legal advice. Rates, fees and rules change, so confirm current terms with the lender, store or agency involved. All dollar figures are invented examples. Free tool [### Sinking fund calculator for yearly bills Enter your own numbers. Private, runs in your browser. Open the calculator →](/tools/sinking-fund-calculator-for-yearly-bills) More guides - [Debt Snowball vs Avalanche: Which Pays Off Faster?](/tools/guides/debt-snowball-vs-debt-avalanche) - [How to Pay Off Credit Card Debt: The Numbers](/tools/guides/how-to-pay-off-credit-card-debt) - [Pay Yourself First: Save Before You Spend](/tools/guides/pay-yourself-first-savings) [All guides](/tools/guides) Reach families handling estates, aging parents and life changes who read this guide: [advertise here](/advertise#family). Do it yourself ### Net Worth and Savings Goals Tracker Record your balances once a month and watch your net worth, your goals and your debts change over the year. [See what's inside ($14)](/toolkits/net-worth-savings-goals-tracker)14-day full refund Wrenfold ### Keep this going in a budget you own Wrenfold keeps accounts, budgets, bills and goals on your own computer or iPhone, with budgets that roll over each month. Bring in a bank CSV or your You Need A Budget file, or keep balances current through SimpleFIN Bridge, a separate service you sign up for. $79 once, with an optional $5 a month for updates; the app keeps working if you stop. The free trial records up to 60 entries. [See Wrenfold](/personal-finance) [Compare the three apps](/software) ## Want your budget in an app you own? [See Wrenfold](/personal-finance)[Call (908) 444-6373](tel:+19084446373)