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
375 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.