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
401 thoughts on “Build the Foundation”
My guess as to my monthly income was pretty close to spot-on with what it actually has been. But I’ve been using Goodbudget and checking my Income v Spending Report for awhile now, so I probably subconsciously just remembered what I’d seen before…
I have just moved back from living/working overseas. I have been using the money i worked so hard for 6 months and now that I have no income we have almost depleted the entire account in just 2 months . I’m excited to see how this course will help change our budgeting !!
As I thought need a visual to not waste money frivolously. When I budget in the past I have noticed I do not incur debt.
Was what I expected.
Monthly income was spot on as I am on a fixed income
My income is what I expected… It’s understating where it goes that I need to work on…
Our incomes are the same other than my husband’s part-time income may include bonuses or be lower than we expect. I have a spreadsheet that I’ve averaged what he’s received so we err on the lower side with his pay. Anything above that is a win.
Always seems low 😀 I looked at the app, and actually was surprised that it seemed lower than i thought. :/
To stay organized.
We have a set income..so no surprises. Funny thing, before GB I had never actually totaled our sources of income. The only thing I’m not sure about is that each month we take a set amount of money from our retirement account. Part of that money we live on, and a percentage we leave with our retirement brokerage for them to pay federal taxes for us. so should what should I record as the income? All of it or just the part we actually can spend?
My income is consistent. My husband’s fluctuates so it’s harder to budget.
About what I thought it was.
I just received a raise last month so my estimate was based on the last two “newer” checks and I was only about $30 off
It’s pretty accurate, I think. It’s not including what I’m down in debt for now, but I’m working my way up. I hope
You shouldn’t include your total debt in your expenses. Only subtract what you pay monthly for now.
My husband and I are on a fixed income so we surely know how much it is. We have used Goodbudget long ago and we got so disciplined that we stopped using it. Now we have lost the track again and we need to start over, specially because we have to adopt and engage with a new habit of saving money.
Higher than I expected
As I’m working with my wife for the first time in joint budgeting and dealing with the finances she will see our joint income for the first time! Help!
My income is what I expected because I’ve been budgeting for a while. My husband’s income fluctuates a lot because of his side hustle, so that will be a new adjustment as we move forward with creating budgets.
My income was lowwer than I expected. But I feel this app will help me understand budgeting and lowering my bills.
My income was exactly where I thought it was because I have already slightly been budgeting I just can’t seem to keep to it.
I calculated my estimated net income with the calculator on smartasset.com to see what the expected tax deductions will be. Better than I’ve ever made, gross looks great, net not as much!
My income was higher than expected.
Definitely high spending which I expected. Since my husband is paid by a commission I can only count on my bi-weekly income for budgeting purposes, this may be my biggest challenge in planning a budget.
I really was not sure what to expect, but it is very much lower than I what I need.
Just what I expected. Have a monthly salary. Only difference is + extra when having vacation or – less if sick
Income is a little higher than I thought, but had a good month with the holiday side hustle.
More than I expected. Where is it going is the problem.
I get paid monthly the same rate of pay except for every 3 months I receive commission on top of that base and I need to budget that commission as I currently see it as spending money but it’s really just part of my annual salary.
On a fixed income so this is steady every fortnight.
My est on income was very close. Child support is my variable sometimes.
About what I expected.
I have only one source of income and it is consistent, but I could probably bring in more with a side hustle. At this point though, I want to better manage what I have first.
I knew what my income was since I have only one and it is fairly consistent. I could probably improve on it with a side hustle or going back to school. Until then, I need to learn how to use what I have more wisely.
We I added my husband and I incomes, we made more than I expected. I just need to figure out where we are going wrong.
I pretty much know what my income is.
My estimate pretty matched what I actually get. Writing it down though helped concretize this.
No surprises. I check my monthly pay statements.
About what I expected.
I was fairly close with my estimate. We’ve had a steady income for awhile now.
Close to what I expected but lower then normal. The beginning of the year is always lower for me as more deductions at the beginning of the year.
Fixed figure every month. No side hustle yet.
I’m on a fixed income, so I know what I “draw”. My problem is making that monthly check last the whole month!
I was surprised that I am bringing in a little more than my husband who is working overtime but his pay fluctuates so budgeting might be hard.
I knew what mine is as I have a fixed each fortnight. I just basically live from pay to pay though and am unable to but any cash savings in reserve to use for anything other than the necessities. I’m hoping this app will help me to the path of better money handling.
never have i tallied up both incomes before. what comes in goes out.
Hard to pinpoint an accurate amount this past month we are in the middle of buying and selling homes. I don’t think we will have accurate numbers until March or April. I feel like we are constantly spending on inspections, etc. Hopefully, April will be a extremely better
pretty much what I expected
was what I thought it would be
I have a general idea of hubby and I’s income. Know how much comes in but can’t for the life of me, work out where it all goes. Looking forward to pluging that leak when its found.
i have a lot more money then i thought i did and now im going to make it work for me!
Income was higher the prior year for several reasons though I have had irregular income for the past few years. This will stabilize somewhat this year and hopefully going forward and will help budgeting somewhat easier to manage.
I work shift work so my income each month fluctuates depending on how many penalty rate hours I work. Last month was higher than normal.
About what I expected
Just as I expected. Spending is at least $100 more than monthly incomes through the entire year. How we have made it through the year I’m not sure.
I took accounting classes in high school so creating budgets Is easy. Goodbudget and the envelope system make it easier to follow. A budget is seeing the money facts and setting boundaries for yourself.