How this number is made
A sinking fund is a pile of cash for a known bill: insurance, a roof, a tax. If the cash earns interest, the monthly set-aside is a bit smaller than the goal divided by the months.
- Months are how long until the bill is due.
- Use a rate you actually earn on that cash. Zero is honest for a checking account.
Formula
With no interest, monthly = goal ÷ months. With interest, monthly is the payment that grows to the goal at that rate.
Worked example
With the figures already in the form, set aside each month is $490.90.
Questions
Is this the same as the savings-goal page?
Same family. This one is aimed at a short, named bill and shows the no-interest set-aside beside the interest-adjusted one.
What if the bill moves?
Change the months. A fund that is late is just a smaller payment against a closer date, or a shortfall.