Build a plan around take-home pay

Start with the amount actually deposited after deductions. Convert that amount to an average month, list your bills, and leave room for flexible expenses. A monthly average is useful for planning, but it is different from the cash available on a specific date.

1. Use net pay

Use the amount deposited after deductions. The planner multiplies that amount by 52 for weekly pay, 26 for biweekly pay, 24 for twice-monthly pay, or 12 for monthly pay, then divides by 12.

2. Normalize recurring expenses

Yearly bills are divided by 12. Weekly bills are multiplied by 52 and divided by 12. Monthly averages help comparisons but do not show exactly when cash leaves your account.

3. Leave room for irregular costs

Include groceries and other variable costs in flexible spending. Set aside amounts for irregular expenses. A negative remainder means entered spending and saving exceed average income.

4. Set a reachable savings goal

The goal tool divides the remaining amount by a monthly contribution and rounds up to whole months. It assumes no interest or withdrawals. It does not automatically add that contribution to your monthly budget.

Created by Jackson Smith, founder of Payday Path.