Month by month with a steady salary
This shows what would have happened if you'd paid yourself the salary above through the months you entered. The running total starts at zero, so any negative number is money you'd have needed in the bank at the start.
| Month | Income | Tax set aside | Into / out of buffer | Running total |
|---|---|---|---|---|
| Enter your numbers above to see this table. | ||||
How to use this calculator
- Enter your income for recent months, after business costs but before tax. A full year gives the best picture.
- Choose how much to set aside for tax from every payment.
- Add a safety margin so you pay yourself slightly less than your average and the buffer grows.
- Pick a buffer size. Three months of salary is a common starting point.
How it's calculated
Worked example
Sam's income over the last 12 months, after business costs, was 2,500, 2,000, 4,000, 3,000, 6,500, 5,000, 7,000, 4,500, 6,000, 5,500, 3,500 and 4,500. Sam sets aside 25% for tax and uses a 10% safety margin.
Sam can pay themselves $3,037.50 every month. Because the year started slowly, Sam would need $3,525 in the bank first. By the end of the year the buffer has grown by $4,050, which is more than a month's salary.
Tip: review your salary every 3–6 months. If the buffer keeps growing, give yourself a raise. If it keeps shrinking, lower the salary before it runs out.
Frequently asked questions
Why pay myself a salary when my income varies?
A steady salary makes personal budgeting much easier and stops a good month turning into overspending. The buffer in your business account does the hard work of absorbing the ups and downs.
What if I've only just started freelancing?
Use the months you have, even if it's only 3, and choose a bigger safety margin, such as 20–30%. Update the numbers as you get more history.
Should the tax money go into the buffer?
No. Keep tax money in its own account so it's ready when your tax bill is due. The buffer is only for evening out your salary.