Freelancer Guide

Purpose: estimate the buffer R* so your chance of the balance ever going negative within your chosen horizon is ≤ ε. Educational heuristic — not financial or tax advice.

1) Set Inputs Practically

• Income (min/mode/max): realistic worst/typical/ceiling month.
• Expenses: fixed essentials; variable mean you can trim; ±% band = volatility of lifestyle spend.
• Spikes: rare big costs — set monthly % and amount.
• Job/Client loss: hazard % and downtime months; set Top Client Share if concentrated.
• Pipeline & Collection: signed work and days to cash.
• Seasonality: keep small unless you truly see large swings.
• Tax Reserve & VAT: tax skim reduces usable cash; VAT removes pass‑through portion.
• Monthly Save: planned, deterministic contribution to the buffer each month.
• Itemized Lists (optional): build granular income & expense items then push them into Inputs for transparency.

2) Choose Horizon and ε

• Horizon: 6–12 months common; longer raises R*.
• ε: start at 5% (conservative). 2% if very cautious, 10% if you accept more risk.

3) Interpret Outputs

• R* Required Buffer: minimum starting cash to keep ruin ≤ ε.
• R* CI (80/90/95%): bootstrap uncertainty; 95% wider than 90%.
• Ruin Prob (Current): today’s risk at your current buffer.
• Ruin Curve: diminishing returns beyond R*.
• Percentile Paths: median, P5 (stress), P95 (optimistic) + (Pro) P25–P75 core band.
• Risk Attribution: which drivers push R* higher (spikes, volatility, client loss, etc.).
• Time‑To‑Ruin (TTR) Histogram (Pro): distribution of first negative month vs “Never”.
• Scenario Comparison: multi‑select scenarios (Pro multi) to see relative % deltas in a popup.
• Expanded Exports (Pro): PDF/CSV including inputs, outputs, cash flow, percentile paths (P25/P75), ruin curve, TTR, and driver deltas.
• Prompt Creator (Pro): AI drafting helper for scenario notes / explanations.

4) Levers to Pull

• Lower variance: maintenance/insurance for spikes, trim variable band, diversify clients.
• Build faster: increase Monthly Save; temporarily cut non‑essentials.
• Smooth receipts: shorter collection, milestone billing, partials.
• Keep pipeline realistic: conservative conversion so R* isn’t understated.

5) Scenario Recipes

• Concentration stress: top client 70–80%, add 2–4m outage → compute new R*.
• Bad‑month spike: raise bad‑month % and spike % → CI widens, R* increases.
• Faster save: increase Monthly Save to reach R* in 3–6 months.
• Seasonal crunch: amplitude 30–40% with winter peak; note P5 dips and higher R*.

6) Differences & Limits

• Closed‑form vs Monte Carlo: >15% gap implies discrete spikes/downtime or non‑normal tails drive risk; trust Monte Carlo.
• Confidence Intervals: 95% should be wider than 90%. If identical, increase sim quality or rerun.
• Limits: heuristic; excludes credit lines, asset liquidation timing, granular progressive tax, chained receivable delays.

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