Expense Shock Stress Test Calculator

Example Data

A sample scenario to help you understand typical inputs and outputs.

Formula Used

This calculator projects month-by-month savings using a simple cash-flow model.

• Baseline expenses: Expenses(m) = Expenses(0) × (1 + inflation)^(m−1)
• Baseline net: Net(m) = Income(m) − Expenses(m)
• Stressed expenses: during shock months, ExpensesStress(m) = (NonDisc + Disc×(1−cut)) × (1+increase) + monthlyExtra
• One-time shock: applied in month 1 as OneTime(m)=oneTime else 0
• Stressed net: NetStress(m) = IncomeStress(m) − ExpensesStress(m) − OneTime(m)
• Savings balance: Balance(m) = Balance(m−1) + Net(m) (baseline) and similarly for stressed.

Stress score is a scenario-comparison metric based on solvency, minimum savings, and average deficit.

How to Use This Calculator

1. Enter your net monthly income, current savings, and a projection horizon.
2. Fill in your typical monthly expenses. Separate essentials from discretionary spending.
3. Set the shock (one-time, recurring, and/or percentage increase) and its duration.
4. Optionally model an income drop and a discretionary cut as a mitigation step.
5. Press Submit Stress Test. Review the score, runway, table, and chart. Download CSV or PDF if needed.

Why stress testing matters

Household budgets often fail from one unusual month, not slow drift. A stress test converts “what if” into numbers: surplus, savings runway, and the month your balance turns negative. Testing a 10%–30% jump in key bills can reveal whether your plan depends on perfect conditions. Use this calculator to compare baseline cash flow versus stressed cash flow across a chosen horizon. For stronger coverage, test both mild and severe scenarios and record the weakest month for quick comparisons later too.

Choosing shock assumptions

Model shocks as one-time costs (medical bill, repair) or recurring increases (rent, utilities, groceries). Common planning ranges include a one-time shock equal to 25%–100% of one month’s expenses, plus a recurring increase of 5%–20% for 1–6 months. Add an income dip if your work is variable; even a 5% cut can erase a thin surplus.

Savings runway and buffers

Runway is the number of months savings can cover a deficit. This tool projects the savings balance each month and highlights the minimum balance reached. Many planners target an emergency buffer of 3–6 months of essential expenses, then increase to 9–12 months for households with single incomes, high debt, or unstable earnings. A longer horizon (12–24 months) helps spot repeated strain.

Debt and fixed costs impact

Fixed payments reduce flexibility because they do not shrink during shocks. If debt and housing exceed 40%–50% of take‑home pay, small shocks can cascade into missed payments. Use the discretionary cut option to see how trimming 10%–30% of non‑essentials changes the outcome. If the chart still trends down, the plan needs structural changes, not small cuts.

Using results to improve resilience

A passing test means your savings never drop below zero and your buffer stays near target. If you fail early, increase surplus by lowering fixed costs, refinancing debt, or boosting income. If you fail late, shorten shock duration by improving insurance and maintenance plans. Re‑run scenarios quarterly and after major life events to keep your plan realistic.

FAQs