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name: budget-builder description: Builds a zero-based monthly budget from take-home income using the 50/30/20 framework with explicit adaptation rules and sinking funds for irregular expenses. Use when someone says "help me make a budget", "I don't know where my money goes", "my spending feels out of control", or after an income change or move. Do NOT use for choosing what to fund first across debt, savings, and investing - use financial-planner instead; for sequencing multiple debts - use debt-payoff-planner; for sizing the cash cushion - use emergency-fund-planner; for company or campaign budget variance reporting - use budget-vs-actual instead. metadata: title: "Budget Builder"

Budget Builder

A budget is not a restriction on spending - it is a spending plan made in advance. The failure this skill prevents is the budget that dies in month two: built on gross income, blind to irregular expenses, and never reviewed. Build one that survives contact with real life.

Operating procedure

Step 1: Gather inputs

Collect before allocating anything. Label guesses as guesses.

1. Monthly take-home income - net dollars that land in the bank, all regular sources (salary, side income, rental). If income varies, use the average of the last three months and adjust upward only when a higher month is confirmed.
2. Fixed essentials with amounts: rent or mortgage, utilities, insurance, minimum debt payments, transportation to work.
3. Variable essentials: groceries, fuel, medical. Pull from 2-3 months of actual statements, not memory - self-reported spending typically undershoots reality by 10-20%.
4. Wants: dining out, subscriptions, hobbies, entertainment. Statements again, not memory.
5. Irregular annual costs: car registration, home repairs, holiday gifts, annual premiums, vet bills.
6. Savings and debt goals, ideally already prioritized by financial-planner.

Step 2: Apply the 50/30/20 starting split

Allocate net income across three buckets as a starting point, not a rule:

• 50% needs: rent or mortgage, utilities, groceries, minimum debt payments, insurance, work transportation.
• 30% wants: dining out, subscriptions, hobbies, entertainment.
• 20% savings and extra debt payoff: emergency fund, retirement contributions, accelerated debt payments.

Adaptation rules, in order:

• Needs above 50% (common in high cost-of-living areas, often 60%+): compress wants first, then savings temporarily, until income grows. Never zero out savings entirely - hold at least 5% or the budget has no shock absorber.
• Needs above 70%: this is a structural problem, not a category problem. The fix is income or a housing/transportation change, not tighter grocery discipline. Say so.
• Carrying debt above 7-8% APR: the 20% bucket goes to extra debt payments per debt-payoff-planner, after the starter emergency fund per emergency-fund-planner.

Step 3: Convert irregular expenses to sinking funds

Annual and irregular costs destroy budgets when they arrive unplanned. Divide each predictable irregular expense by 12 and enter that amount as a fixed monthly line item. A $600 car registration is a $50/month line, every month, in a separate labeled bucket.

Step 4: Balance to zero

Subtract every planned expense from take-home income until the result is exactly zero - every dollar gets a job. Money left over gets assigned explicitly: savings, a sinking fund, or extra debt payoff. If spending exceeds income, cut in this order: discretionary subscriptions, then other wants, then savings rate, then needs (which usually means a structural change per Step 2).

Step 5: Set the review cadence

Review at the end of each month before the next begins: compare actual to planned by category. A budget that is never reviewed is a wish list. A category off by more than 15% for two consecutive months is mis-sized - change the budget number to match reality and rebalance, rather than resolving to "do better."

Template

Copy and fill. Percentages are of take-home income.

MONTHLY BUDGET - [FILL: month/year]
Take-home income:                    $[FILL]

NEEDS (target ≤50%, actual [FILL]%)
  Rent / mortgage                    $[FILL]
  Utilities                          $[FILL]
  Groceries                          $[FILL]
  Insurance                          $[FILL]
  Minimum debt payments              $[FILL]
  Transportation                     $[FILL]

WANTS (target ≤30%, actual [FILL]%)
  Dining out                         $[FILL]
  Subscriptions                      $[FILL]
  [FILL: hobby/entertainment lines]  $[FILL]

SINKING FUNDS (annual cost ÷ 12)
  [FILL: e.g. car registration]      $[FILL]
  [FILL: e.g. holiday gifts]         $[FILL]

SAVINGS + EXTRA DEBT (target 20%, actual [FILL]%)
  Emergency fund                     $[FILL]
  Retirement                         $[FILL]
  Extra debt payment                 $[FILL]

REMAINDER (must equal $0):           $[FILL]

Worked example

Take-home $4,200/mo. Needs total $2,400 (57%): rent $1,450, utilities $180, groceries $420, insurance $150, debt minimums $120, transit $80. Sinking funds $105: registration $25, gifts $50, vet $30. That leaves $1,695. At 57% needs, apply the adaptation rule: compress wants to ~25% ($1,050 - dining $350, subscriptions $60, everything else $640) and put $645 (15%) to savings - $400 emergency fund, $245 extra on the 22% card. Remainder: $0. Wants absorbed the squeeze; savings stayed above the 5% floor.

Deliverable

Produce a filled zero-based budget using the template: every line has a dollar amount, sinking funds appear as monthly line items, bucket percentages are computed against take-home, the remainder equals zero, and a one-line note states which adaptation rule (if any) was applied and why.

Do NOT

• Do not budget from gross income; only take-home pays bills.
• Do not accept remembered spending figures when statements are available - memory undershoots.
• Do not leave irregular annual costs out because they are not "monthly"; they are why budgets break.
• Do not balance by cutting needs while wants are untouched, or by silently zeroing savings.
• Do not treat a consistently blown category as a discipline failure; resize it and rebalance.
• Do not decide debt-vs-savings priority here - that ordering belongs to financial-planner.

Quality bar

• The budget sums to exactly zero against take-home income.
• Every irregular expense the user named appears as a sinking-fund line.
• Bucket percentages are shown, and any deviation from 50/30/20 cites an adaptation rule.
• Variable-income users have the 3-month-average baseline documented.
• The review cadence and the 15%-for-two-months resize rule are stated in the handoff.

Escalation

This is general financial education, not individualized financial advice. For self-employment income, major life transitions, or debt loads where minimums crowd out essentials, recommend a certified financial planner or nonprofit credit counselor.