The Council will be able to earmark £4.75m to put towards the City of Culture activities in 2021 after it announced its end of year financial position for 2017/18.
The news is highlighted in a Council report which outlines an overall end of year revenue underspend of £1.6m.
Cabinet Member for Strategic Finance and Resources, Cllr John Mutton, said that it was important that the Council was managing its finances effectively, and preparing for more challenging times in the coming years.
He said: "We have been absorbing cuts in national government funding, and are well aware that this will become much tougher to manage in the next few years. This is even more difficult when we are having to cope with greater demand for our services in areas like, social care, housing and homelessness.
"We have worked very hard to make the best use of the money that is available to us and we have been able to put money aside to stabilise our finances, support our key policy priorities and still achieve a small underspend.
"This position includes identifying funding for future City of Culture costs. This means that Council will be able to give its backing to what will be a fantastic celebration for Coventry in 2021. We hope that our support will help bring longer term benefits to the city."
The Revenue and Capital Outturn Report for the end of year 2017/18 explains the Council's financial management over the previous 12 months with £2.1m being set aside to strengthen the business rates reserve.
The finance report also provides details where budgets have been overspent in children's services and managing housing costs for homeless families.
Cllr Mutton added: "We are always planning our finances based on national economic trends, national finance policies, and identifying how we should be preparing for the future. Local councils are operating in the most challenging of times, and being able to plan effectively is crucial.
"The Council continues to face reductions in government funding and need to absorb the financial costs of a growing city. We are committed to protecting our most vulnerable residents by providing the most cost effective services, while looking at every opportunity to invest for the future."
Cllr Mutton added: "We are always looking for opportunities to protect the budget. I hope that this report demonstrates the strength of the Council's approach to budget management."
The report will be presented at the Council’s Cabinet on Tuesday 12 June.