Budget Buffer Calculator
Determine the optimal checking account buffer to prevent overdrafts and absorb income/expense variability.
Inputs
Results
Recommended Buffer
$1,175.00
≈ 9 pairs of sneakers
Annual Savings from Buffer
$140.00
≈ 9 movie tickets
How to Use This Calculator
- Enter Monthly Income, Monthly Expenses, and Income Variability.
- Set Expense Variability, Overdraft Fee, and Overdrafts Per Year.
- Review Recommended Buffer ($) and Annual Savings from Buffer ($).
- Use Current Annual Overdraft Cost ($) and Optimal Buffer Range to inform your decision.
- Use the chart to visualize the results and explore different scenarios by adjusting inputs.
How the result changes with Monthly Expenses
| Monthly Expenses | Recommended Buffer | Annual Savings from Buffer |
|---|---|---|
| $10,000.00 | $2,000.00 | $140.00 |
| $35,000.00 | $5,750.00 | $140.00 |
| $65,000.00 | $10,250.00 | $140.00 |
| $90,000.00 | $14,000.00 | $140.00 |
What each input means
- Monthly Income
- Average monthly take-home pay.
- Monthly Expenses
- Average total monthly expenses.
- Income Variability
- How much your income varies month to month (e.g. 10% = ±10%).
- Expense Variability
- How much your expenses vary month to month.
- Overdraft Fee
- Your bank's overdraft fee per occurrence.
- Overdrafts Per Year
- How many times you've overdrafted in the past year.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersMonthly Income = 5000, Monthly Expenses = 4500, Income Variability = 10, Expense Variability = 15 = 6 input(s) provided
- Calculate Recommended BufferRecommended Buffer1175 = $1,175
- Calculate Annual Savings from BufferAnnual Savings from Buffer140 = $140
- Calculate Current Annual Overdraft CostCurrent Annual Overdraft Cost140 = $140
- Calculate Optimal Buffer RangeOptimal Buffer Range$675 – $1762.5 = $675 – $1762.5
Engine last updated .
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