Methodology and sources
This page explains exactly how the planner works, which rules it uses and where they come from, so that you can check every result.
1. Income
Monthly income = net salary + other monthly income + (annual bonus ÷ 12 if you choose to add it to the monthly budget). If the bonus is kept aside, the share you choose is added to savings: share × bonus ÷ 12 per month on average.
2. Expert splits
| Rule | Needs | Wants | Savings | Origin |
|---|---|---|---|---|
| 50/30/20 | 50% | 30% | 20% | Elizabeth Warren and Amelia Warren Tyagi, All Your Worth (2005) |
| 60/20/20 | 60% | 20% | 20% | Common adaptation for high housing costs |
| 80/20 | 80% (needs + wants) | 20% | “Pay yourself first” principle | |
| Custom | your percentages (total must equal 100%) | — | ||
Targets are calculated on net monthly income. Savings shown = income − needs − wants (it includes the lines you classify as savings).
3. Annual and irregular bills
Annual total = payment × frequency (1, 2, 4 or 12 times a year). Monthly provision = annual total ÷ 12, added to needs or wants according to the type you choose. The 12-month calendar starts from the current month; the amount “you should already have set aside” is the largest shortfall of the cumulative balance (provisions − payments) over the next 12 months.
4. Savings
- Emergency fund = monthly needs (including the provision for annual needs) × chosen number of months (3 to 12). The usual recommendation is 3 to 6 months of essential expenses.
- Goals: monthly effort = (target − already saved) ÷ number of months, without interest.
- Projection: compound interest calculated monthly: balance = balance × (1 + annual rate ÷ 12) + monthly savings.
5. Alerts
| Alert | Threshold | Status |
|---|---|---|
| Needs, wants or savings off target | chosen split | exact calculation |
| Housing | 30% of net income | indicative benchmark |
| Housing + loan repayments | 36% of net income | indicative (lenders apply the 28/36 rule to gross income) |
6. What is confirmed and what is indicative
The arithmetic (totals, provisions, monthly efforts, projections) is exact for the figures you enter. Budget rules and thresholds are general guidelines from personal-finance literature and lending practice; they are not legal obligations and do not replace personalised advice. Projected returns are assumptions, not promises.
7. Main sources
- Elizabeth Warren & Amelia Warren Tyagi, All Your Worth: The Ultimate Lifetime Money Plan, Free Press, 2005.
- Consumer Financial Protection Bureau (CFPB), An essential guide to building an emergency fund.
- CFPB, Your Money, Your Goals toolkit.
- U.S. Securities and Exchange Commission, Investor.gov compound interest calculator.
8. Verification and corrections
Every worked example in the articles is recalculated with the planner before publication. If you find an error, write to Khourssaimane@gmail.com: corrections are made quickly and the update date of the page is changed.