Step 11 is for side-hustle income and discretionary spending. Enter gross hustle income, set a tax holdback, then plan guilt-free categories.
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Income Lab has two halves. The top half captures side-hustle income: gross amount earned for this income deposit, plus a tax holdback percentage (default 25-30%). The app subtracts the holdback and shows you the net that's actually available to spend or allocate.
The bottom half is where guilt-free spending lives: hobbies, travel sinking fund, fun money, date night, gifts. These categories are intentional lifestyle spending, not survival expenses. Separating them out means you can enjoy them without feeling bad.
Heads up
Self-employment tax in the US is roughly 15.3% on top of income tax. Canadian freelancers owe both CPP and income tax. A 25% holdback is a floor, not a ceiling. Check with an accountant if your hustle income is significant.
Tip
Opening a separate savings account for the tax holdback makes year-end painless. Auto-transfer the holdback amount each time a gig invoice clears.
Step 9 lets you choose Snowball or Avalanche. Both use the same monthly budget — only the order of attack differs.
The Safety Net step sets your emergency fund target and tells Payday Audit how much to allocate each income deposit.
Step 8 helps you track workplace investing and employer match amounts that are already handled before your take-home income arrives.