Find your baseline
Look at the last twelve months of income. The lowest month, or the average of the three lowest, is your baseline. Build your monthly budget on that number.
Worked example
Monthly take-home ranged from $2,900 to $5,600 last year. Budget on $2,900: essentials first, then savings, then the rest. In a $5,600 month, the extra $2,700 goes to a buffer account, not to new spending.
Once the buffer holds a month or two of baseline spending, you can pay yourself a steady $2,900 from it every month, like a salary, no matter what came in.
Set aside taxes if you're self-employed
If no tax is withheld from your pay, move a share of every payment to a separate account for taxes as it arrives. Ask a tax professional what share fits your situation.
Keep the plan honest
Review the baseline every few months. If a slow season is predictable, use a sinking fund for it.
Try the calculator
Run your own numbers in the free savings goal calculator. It works in your browser and nothing you enter is saved or sent.
Do it in Wrenfold
Wrenfold's cash forecast shows bills and paychecks ahead, so you can see a lean month coming. 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.
Sources
- CFPB: How to create a budget and stick with it
- CFPB: An essential guide to building an emergency fund
Common questions
Should I budget on my average month?
Your average includes good months you can't count on. Budgeting on a low month is safer.
How big should the buffer be?
Many people aim for one to three months of baseline spending, on top of an emergency fund.
How big should my buffer be?
Many people aim for one month of essential costs in the buffer, then build toward more once it is in place.
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.