SKILL.md
Liquidity Management
Core Concepts
Cash Flow Forecasting
Project income and expenses monthly for 12+ months:
- Income sources: salary, business income, investment income, rental income, side gigs
- Fixed expenses: mortgage/rent, insurance, subscriptions, loan payments
- Variable expenses: food, utilities, discretionary spending
- Periodic lumpy expenses: property taxes, insurance premiums, tuition, estimated taxes
- Net cash flow: income - expenses per period → identifies surplus/deficit months
Income Smoothing (Variable Earners)
For commission, freelance, seasonal, or bonus-heavy income:
- Compute trailing 12-month average income as "base salary equivalent"
- Budget based on base amount, not peak months
- Buffer surplus months into a smoothing reserve (separate from emergency fund)
- Target smoothing reserve: 2-3 months of base expenses
- Draw from reserve in below-average months