Baselining

Most people have never calculated what they actually need to live. They know their salary. They know their rent. But the number that makes tentmaking possible - the true minimum to sustain a functional, dignified life - is almost always lower than they expect.

What baselining is

Baselining is the practice of calculating your floor: the minimum monthly income required to cover your genuine needs. Not your lifestyle. Not your aspirations. Your needs. Housing, food, transportation, health, communication, and a small buffer for unexpected expenses.

The purpose is not to live as cheaply as possible. It is to know the number so you can reason clearly about your options. Once you know your baseline, you can figure out how much work it takes to hit it - and how much time is left for everything else.

The rough formula

Here is a simple starting point for calculating your required hourly rate:

• Target annual income (your baseline, not your aspirational salary)
• Divide by 0.6 to account for taxes, benefits, and business expenses (as a freelancer or independent)
• Divide by ~1,700 hours (approximately 40 hours per week for 42 working weeks)

Example: If your baseline is $40,000/year, your required billing rate is roughly $40,000 / 0.6 / 1,700 = $39/hour. At 25 billable hours per week, that covers the baseline and leaves 15 hours for other work.

Use the baseline calculator to run your own numbers, including cost-of-living adjustments for different countries.

The categories to include

• Housing: Rent or mortgage, utilities, internet
• Food: Groceries and a modest dining-out budget
• Transportation: Car payment, insurance, fuel, or public transit
• Health: Insurance premiums, routine care, prescriptions
• Communication: Phone plan, subscriptions essential to your work
• Buffer: 10-15% of the above for unexpected expenses

Do not include: luxury subscriptions, frequent travel, eating out regularly, new electronics, or savings goals. Those can come later. The baseline is the floor, not the ceiling.

The geographic variable

One of the most powerful implications of baselining is what it reveals about geography. The same skill that earns $80/hour in San Francisco earns the same $80/hour in Oaxaca - but the baseline in Oaxaca might be one-third the cost. The gap between what you earn and what you need is where your freedom lives.

This is why geographic arbitrage (Topic 07) and location independence (Topic 09) are so central to tentmaking. The baseline is not fixed. Where you live determines how much freedom a given income buys.

Revisit it annually

Your baseline is not static. Life circumstances change - kids, health, location, debt payoff. Calculate it once, then revisit it every year. Over time, you will notice which costs you can control and which you cannot. That awareness is worth more than the number itself.

"Contentment is not arrived at by having everything you want. It is arrived at by wanting only what you have."

Practical steps

• List every monthly expense for the last three months
• Separate needs from wants honestly
• Calculate your baseline monthly number
• Multiply by 12 for the annual figure
• Use the formula above to calculate your required billing rate
• Compare to what you currently earn - and what you could earn with a higher-leverage skill