How to use the annual bills monthly set-aside planner
- List each bill as a name, the amount of each payment, and the months it is due, using month names or numbers 1 to 12.
- Choose the month the plan starts in. Leave Already set aside empty to see the starting amount you need.
- Read the monthly set-aside, the starting amount needed, the lowest balance and the month it happens, then the month by month table.
- Enter what you already have to see whether it is enough, and copy the table or download the CSV.
Formula
monthly set-aside = ceil(total bills in a year / 12 to the cent)
balance after month k = starting amount + k x set-aside - bills due up to and including month k
starting amount needed = the smallest amount that keeps every balance at or above 0
Each month the set-aside goes in first and then that month’s bills come out. After 12 months the balance is the starting amount plus 12 set-asides minus the year’s bills, which is the starting amount plus at most a few cents of rounding.
Five yearly costs
The sample lists car insurance of $640 in January and July, property tax of $2,400 in April and October, software of $360 in March, a vacation deposit of $900 in June and holiday gifts of $700 in December. The year costs $8,040, so the set-aside is $670.00 a month.
Starting from zero in January the balance is $30 after January, $700 after February, $1,010 after March, and then ($720) after April, when the first property tax payment is due. The lowest balance is in April, so a starting amount of $720 is needed. With that, the balance is never below zero, and it ends at the same $720 after 12 months.
Why a starting amount is needed
A level monthly amount only works if the account is not empty when a large bill arrives early in the cycle. In the sample the first property tax payment comes after only four deposits, which total $2,680 against bills of $3,400 by then. The starting amount fills that gap once, and from then on the plan sustains itself.
If you start the plan just after a big bill, the starting amount needed falls. Changing the start month shows how much the order of bills matters.
Using the plan
Open a separate savings account for the set-aside and move the amount at the start of each month. When a bill changes, enter the new figure and read the new set-aside. The plan assumes the money earns no interest, which keeps the arithmetic simple, and a small amount of interest only helps.
To save toward a single goal with interest use the Sinking Fund Calculator. To give every dollar of income a job see the Zero Based Budget Calculator, and to lay bills on a calendar use the Bill Calendar Planner.
Assumptions and limits
- Each month listed for a bill carries the full payment amount, and a month can be listed once per bill.
- The set-aside is deposited at the start of the month before that month’s bills are paid.
- Up to 60 bills are read. Amounts must be above zero.
- Rounding up to the cent can leave a few cents extra after a year. No interest, fees or inflation are included.
- Nothing typed here leaves your browser.
Frequently asked questions
Why round the monthly amount up?
Rounding down could leave the account a few cents short after a year. Rounding up to the next cent keeps it from running short and leaves at most about 12 cents extra.
What if I already have some money saved?
Enter it in Already set aside. If it is less than the starting amount needed, the headline note tells you by how much the plan runs short at the lowest point.
How do I enter a bill that is paid twice a year?
Put the amount of one payment and list both months, for example 640, Jan, Jul. The page multiplies by the number of months listed to get the yearly cost.
What about bills that vary?
Enter your best estimate or last year’s amount. Update the figure when the bill arrives and read the new set-aside from the page.