Core system
- Find your Baseline Income: average the lowest 3 of the last 6 months.
- Create a Buffer: keep 1 month of expenses in a separate "Income Smoothing" account.
- Pay Yourself a Salary: transfer the same amount (baseline) on the 1st & 15th.
- Overflow Rules: excess above 1 month buffer → taxes, emergency fund, goals, then discretionary.
Category must‑haves
- Taxes: set aside 25–35% of profits (local rules vary).
- Business reserve: 1–3 months of business expenses.
- Irregulars: annual software, equipment, healthcare.
Invoice rhythm & cash‑flow hygiene
- Invoice weekly, due in 7–14 days.
- Late‑fee clause, easy payment links, and automated reminders.
Example
Baseline expenses $3,000 → Pay yourself $3,200/month. Big month? Leave the excess in the buffer until it exceeds $3,200—then allocate to goals.
Frequently Asked Questions
What if I have a $0 month?
Your buffer funds the salary; rebuild it next good month.
How big should my buffer be?
Start with 1 month; aim for 2.
Do I need a business account?
Yes—separate business and personal to stay sane.