Choose the amounts in your plan

Start with income, expenses, and cash

Open Budget and check Monthly take-home income, Monthly living expenses, and Total liquid cash. Our fictional household brings home $4,800 and spends $3,500 each month. The gap is $4,800 − $3,500 = $1,300.

The gap describes money coming in and going out each month. The $26,000 cash balance describes money already held. Keep those two questions separate: what might be available now, and what might be available each month?

Open Cash reserve & other commitments. A cash reserve is money kept aside for costs you want to protect. Months of expenses to protect sets how many months of living costs the calculation keeps aside. The tool starts at six months; you can change it.

Additional cash to protect adds another amount, perhaps for a known upcoming cost. Other monthly commitments covers amounts that need room each month but are not already in the expense total. Do not enter the same bill in both places.

Six months is a starting setting in the software, not a rule that fits every household. Check the settings against your obligations and how quickly you could replace lost income. The next step shows exactly how the settings affect the suggestions.

Make sure food, housing, required payments, and their due dates are covered in the review. If the household is short, look at the consequences of each unpaid bill and any help available from providers or local support. A possible investment gain cannot reliably pay an essential bill due now.

Work out the suggestions one step at a time

For this worked example, set Share to save each month to 0%. This turns off a separate monthly savings amount while we work through the reserve calculation. It does not remove the cash reserve. We will compare the 5% starting setting afterward.

First work out the cash to protect. Six months at $3,500 a month is 6 × $3,500 = $21,000. Add $1,000 for another protected cost, and the total is $22,000.

The household has $26,000 in liquid cash. After keeping $22,000 protected, $26,000 − $22,000 = $4,000 remains. That is the suggested starting amount. If cash is below the protected total, the starting suggestion is zero.

Now work out the monthly suggestion. Begin with the $1,300 gap. Suppose the household has $300 in other monthly commitments that are not in its expenses yet. Subtract them: $1,300 − $300 = $1,000 of monthly room.

In this version, the $22,000 reserve is already covered. The suggested monthly addition is therefore $1,000. The starting suggestion uses cash already held; the monthly suggestion uses the room in ongoing income.

Change only the cash balance to $21,500. Now the household needs another $500 to reach its $22,000 reserve. The starting suggestion becomes zero. The calculation assigns $500 of monthly room to fill that gap, leaving $1,000 − $500 = $500 as the monthly suggestion.

If the reserve were short by $1,000 or more, all $1,000 of monthly room would be assigned toward it. The monthly investment suggestion would be zero. This is only a calculation: the app has not moved money into savings or bought anything.

New budgets start with Share to save each month at 5%. You can change it. In this household, 5% of the $1,300 income-minus-expenses gap is $65. That is a target for cash savings, kept separate from investments. The calculation sets aside other monthly commitments and fills the reserve shortfall first. It then allows for the savings target, up to the money still available.

With the full reserve and the 5% setting, the monthly investment suggestion is $1,000 − $65 = $935. With cash of $21,500, it is $1,000 − $500 − $65 = $435. These differ from our 0% examples because $65 now has a separate savings job. If less than $65 remains after commitments and the reserve top-up, only that smaller amount can go toward the savings target.

Do not count the same savings amount twice. If you enter it under Share to save each month, remove that same amount from expenses or Other monthly commitments. Planning describes how you intend to use money; you still make any transfers yourself.

The same dollar cannot cover two jobs at once. If an account holds $500, with $240 for a bill and $160 for essentials before payday, only $500 − $240 − $160 = $100 remains unassigned. The bank balance alone did not tell you that.

Choose your own amounts

Starting amount and Add each month are the amounts you choose in Budget. Use suggested amounts copies the current suggestions into those fields. You can choose different amounts, including zero. Later screens call the recurring amount Monthly additions.

Return to the household with $26,000 in cash and Share to save each month set to 0%. The suggestions were $4,000 to start and $1,000 each month. Suppose it chooses $3,000 to start and $600 monthly. It has left $1,000 of the suggested starting room and $400 of the suggested monthly room outside this plan.

The app keeps amounts you explicitly chose when you apply updated financial totals. That lets you keep a decision, but it also means an old choice can remain after life changes. Compare it with the new numbers.

If a chosen amount is above the suggestion, the app shows a warning and keeps the choice. Check why it differs. A field accepting the number does not prove the household can afford it.

See where your chosen money would go

Choose Continue to allocation to open Your money map. Look at Starting amount first, then Monthly additions. These show two different parts of the plan: where the first amount would go, and where later contributions would go.

The map divides each amount among long-term, medium-term, and short-term branches. These are the plan’s allocation groups. The percentages for each period need to add up to 100%, so every dollar has a place. A branch can be zero.

Monthly percentages begin with the starting mix, but you can change the two mixes separately. For an arithmetic example, split the chosen $3,000 into 20%, 70%, and 10%. One percent is $30, so those shares are $600, $2,100, and $300. They total $3,000.

Use the same example percentages on the $600 monthly amount. One percent is $6. The shares become $120, $420, and $60, which total $600. These percentages explain the calculation; the strategy’s allocation decisions come later.

A branch can divide again. The long-term branch may include destinations called Crypto Loan Strategy, HSA, and IRA. A percentage inside that branch uses the branch amount, not the whole plan. Half of the $600 long-term starting amount is $300. Half of the $120 monthly long-term amount is $60.

Read the destinations as well as their amounts. The entire chosen amount does not automatically go to crypto. A destination also has its own rules, such as eligibility and contribution limits, which the picture does not remove.

Check the plan before keeping a version

Open Review plan. Check the starting amount, monthly additions, allocations, and any checks still waiting. Then save the version you want to keep. An unfinished draft can also be saved, so “saved” does not mean every check has passed.

Saving records the plan. It does not place a trade, transfer money, or borrow money. You are keeping a set of choices that you can review before acting.

When pay, spending, required payments, or cash balances change, follow the same route again. Review records in Finances, bring the totals into Budget, check your amounts and Allocation, and save the changes you choose.

Understand what your debt costs

Suppose you still owe $1,000 from money you borrowed. That unpaid borrowed amount is called principal. Interest is the charge for borrowing it, worked out under the agreement. Fees may add other costs.

The required minimum payment is the amount due by the deadline. Paying only that amount may leave much of the balance unpaid, so charges can continue. Keep required payments on other debts in view when deciding whether to pay extra on one.

Here is a simple one-month example. A $1,000 balance charged 2% for that month costs $20 in interest. If you pay $200 of principal before the calculation, the balance falls to $800. Two percent of $800 is $16, which is $4 less for that month.

The example uses a monthly rate and leaves out fees and daily calculations. Actual agreements can work differently. U.S. credit-card rates are usually quoted yearly as APR, or annual percentage rate. Two percent per month does not mean two percent per year.

A retirement balance is not bill money

An employer may offer to put money into a retirement plan when you contribute. That can help a future goal, but check who qualifies, what you must contribute, fees, tax rules, and when money can be withdrawn.

Some employer money becomes yours only after you meet the plan’s rules, often by staying for a period of time. That ownership is called vesting. Money can belong to you and still have withdrawal limits or tax consequences.

HSA, IRA, and employer retirement accounts have their own rules. A box in Allocation helps you plan an amount; it does not prove you qualify for that account or permit borrowing from it.

Also check what is already taken from your pay. If a retirement contribution was deducted before the take-home figure, do not subtract it again. A retirement or investment balance is not checking-account cash available for this month’s bills.