Creating a budget is like building a house. There are lots of steps, and the most important one is laying a solid foundation. If the foundation isn’t strong, the house built on top won’t be sturdy either. But when a foundation is strong, the house on top will be sturdy too. It won’t crumble after a few years, and will hold firm when the weather gets rough.
We want our budgets to have a solid foundation like this — one that allows us to weather the storm and change with the seasons.
The foundation of a budget has several pieces, the most important of which is estimating income and spending. When we can do that well, we can learn to adapt our budgets throughout our lifetimes, so that our budget continues to serve us well for years. After all, budgets are never final!
But what’s surprising is that many people are never taught the fundamentals of creating a budget. Our friend Lisa said,
“I never saw a budget that my parents used, so [making a budget] was new to me. They might have had one, I just didn’t know about it.”
So that’s what we’ll focus on this week! We’ll start the budget making process by creating a sturdy foundation that you can build the rest of your budget on. The first step is knowing how much income you have to work with.
Today’s Assignment
- Estimate your income. If you’re not using the Goodbudget app yet, or are just getting started, head to your online bank account and tally up all of your incomes from the last month. Be sure to include things like paychecks, side hustles, child support, pensions, etc. If you’ve been using Goodbudget, you can get an exact figure by looking at your Income vs. Spending report.
- What did you notice when you estimated your income? Was it higher or lower than you thought? Share your experience in the comments below.
Note for couples: Remember to count all the money that you share. That might come from monthly paychecks from each of you, plus money from one of your side hustles. And if you don’t have the same, clear understanding of which incomes you’re sharing, now’s a great time to get on the same page.
That’s it for today! We look forward to seeing you in the next assignment.
Happy budgeting,
-The Goodbudget Team
409 thoughts on “Build the Foundation”
It was good to see everything in black and white and the security of that clarity.
My monthly income is pretty much the same every month.
Too much spending but I already knew that
Way to much spending
It’s about what I had estimated my average monthly income to be although I would’ve thought it would be higher just for January since I had some unexpected funds come in, so I guess I make less than I thought I did
It helped seeing all the numbers. Also, see how money is tied to emotion. I have 4 jobs. I don’t think I have the energy for a 5th job however seeing the numbers now I can make better decisions. Working reducing a lot of my Debt. One Debt at a Time.
My estimated income was what I was expecting no less no more.
It was more money than I thought.
I was expecting less coming in. Way too much going out and not a lot to show for it.
I just started a new job so thankfully my income is definitely more than what it was last month.
I only have one specific income, it’s my monthly salary, that doesn’t really change at all. 🙂
My current income is known, but will only last ’til I retire next month. I am waiting to receive statements from 2 of 3 pension administrators. Once those monthly amounts are known will edit my budget. My spouse is not taking part in this budgeting journey. Not knowing what we’ll have to live on combined is disconcerting.
It’s about right
It feels frustrating because I am a solo practitioner whose clients vary monthly. I also teach in the fall, but those classes may vary, which means so does my income.
It was a lot more than I expected.
I am on salary so my paycheck is the same.
I was not surprised because i was under budget im always under, but thats why im taking this class to learn the steps to manage my money better
My income was what I expected it to be.
I actually already knew my income so it wasn’t a surprise to me.
I am positive on my money spending but I could narrow it down.
My income fluctuates slightly with each paycheck but it is overall what I thought.
My boyfriend and I both work full-time and earlier this year we started sharing a checking account to make it easier to pay bills and save. I am surprised how much it helps having a shared bank account. We both work full-time and make about the same amount, but it’s so much easier to pay bills together instead of splitting bills and trying to keep track of who pays what. We definitely need to finetune our process and take advantage of the excess money each month to pay off debt sooner.
Definitely was higher than what i actually thought it was once calculated everything.
My income is exactly what I thought it was. No surprises here.
Feels lower but is realistically higher especially when a budget is in place.
I live on a fixed income, so no surprises there. But I know I spend without thinking. I’m hoping a budget will help with that.
Our income varies every month but we have a baseline of income we can work with. Any money over the baseline income is bonus money for savings.
Assignment #1 When and where.
Answer: Will be doing each week’s assignments in the morning with my tea. Will be doing 1-2 assignments per day, depending on the. Hoping that it will create of habit of checking banking status.
Assignment #2 Income vs Spending
Not really surprised at Spending more than income. Especially over the last 4 months while I was off work as my husband was pallative. Passed away last month and will soon be going back to work.
I was surprised that calculated down to a monthly income, I have already reached a neat number I inteded to reach for several years but thought unreachable. Means three things to me: 1. I can reach income goals. 2. I was bad at not spending it all until today. 3. I need a new income goal and a saving goal, too.
Realizing my income. I feel sick. Because there is no reason why I’m paycheque to paycheque
My income is fixed and paid monthly so it wasn’t a surprise
When doing this and creating a budget I was able to get a clear understanding where my money is going. I am in my 30’s and I don’t want to be living paycheck to paycheck. When I did this and got a better understanding I was able to save $100 to my savings which is amazing. I have never been able to save like this.
I am not surprised about the income, I was familar with that. The part I am stressed about is where all the money is always going!
I thought it would be higher but it was the same
Wow. After all my bills, I should have so much money left over and I don’t. That’s crazy
My income total is about what I expected since it is the same every two weeks. However, I know my monthly income can change if there are 3 pay periods within the month. That is something I don’t think I completely took into account.
My total income is actually quite a bit higher than I saw. You’d think with the amount I make, I wouldn’t have such troubles. Granted, most of it gets split to multiple accounts, for savings (which end up spent anyways), and rent. I will make sure to begin the attempt to change and make those funds last.
A bit higher than expected. I’m paid bi-weekly, and every paycheque is slightly different, so I had a rough idea, but the total was higher than I thought. Which is unfortunate, as that means I’m spending more than I thought. But, I’m doing this course and app for a reason, so just this exercise gives me motivation to continue.
Same every month with Social Security and pension.
I’m basically ok, more money comes in that I spend. However I do waste to much on nothing and I know, that major expenses will come up.
My in one is higher than I thought
I thought I had more money coming
I actually did this so I could see where I was before I got the app. My take-home is about the same as I estimated.
I thought that i was saving more money