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
377 thoughts on “Build the Foundation”
Income consistent.
Not what I expe ted
Salary + cash flow x2
Income is steady, however there is room for improvement.
The sum was way more than expected way high, I can’t believe I wasn’t comfortable one bit
I only figure in my social security thus far because my earned income varies quite a bit month to month.
I know my income and it is fairly stable from a single source. However my partner is self employed and when we do a joint budget later that will be interesting
Right now my studio is closed due to Covid but ordinarily my income varies as I work by appointment based. Right now I pay myself weekly out of the PPP loan I received. So I’m sure that what i’m making right now is much lower than what I usually bring in. I’ll Get a better picture when I am able to reopen.
It was challenging to do this activity during this time of COVID-19. My wife’s work hours are reduced and I had to leave my 2nd job. But it showed that our income is inconsistent.
Income for the most part stable
It’s exactly what I thought
Our income was alittle higher than I thought. Will put more toward a fund for emergencies.
Trish
Income is fixed I’m retired and need to manage what comes in and what goes out and increase savings.
Trishsamuel
Income is good but room for improvement as I just started my online art camps. And with the virus my preschool art job is cancelled this summer.
Income is steady, however there is room for improvement
Income is consistent.
Income was what I thought it was.
My income is stable, but I will be experiencing a cut in take home pay when I commence studies later this month. I will have to pay more tax to pay done the resulting debt.
Income consistent
Wow; it’s an opener.
I am spending a lot more than I thought.
Income is consistent. I just have to get a handle on how much I spend because it’s like I’m spending without thought.
Definitely too much spending. But the income was exact.
Inconsistent income but manageable.
My income is fairly stable and roughly them same for every month
I have been following a budget that I set up with my sister for assistance. I can spend too much on unnecessary items,especially hair and makeup online from Sephora.
Together, we realized that the budget I was using at the time, was one where I never wrote each envelope for each item/ category where all my spending went.
Now I have a clear cut budget book, which is separated into total income received per month; then ther are all the categories that I spend regularly in a month. As I am a disabled nurse due to lupus and fibromyalgia as well as chronic fatigue syndrome-Me, I only get paid monthly and not every 2 weeks as I used to.
Therefore I must be correct in placing the exact amount of monies into each section of my budget and this book lists everything u could think of ,in terms of all the envelopes , so if I write everything down where each offered spending category, I use monthly + my savings as well. I receive 2 different incomes from1. Canadian long term disability’s well as well as 2. My private insurers from the nursing union as well. Both last until I turn 65 ,then I have social security checks for the rest of my life, and my savings are 0.00 until I finish paying off 2 loans within the next 2 years.
Then, the extra money that I have will 1. Go into my savings account as well as 2.some spending money which I don’t have a lot of ( no more than $ 100.00 Canadian dollars) which is a real exciting goal for me. Know I can see where all my income goes to,( each day, I also have another page that I track my daily amount of money spent .)
It has changed the way I look at my money and I am much calmer and less nervous about not having enough money to pay all areas in my budget each month. This course allows me to look at my budget even more closely, to ensure that it is congruent with my budget set up a year ago, and I have never missed any payments of any debts as well as normal monthly categories. I am excited to see how this course pans out for me.
Higher than expected
My husband and I make enough and should actually have a nice amount left over each month. When he was out of work due to the pandemic we borrowed so now we are playing catch up. However we see that going forward we have to put money aside like it is a bill also.
Way way WAAAAAY higher. No idea where my money goes – this is why I NEED this 🙂
My income was tragic!!!
Income consistent
Income is fixed I’m retired and need to manage what comes in and what goes out and increase savings.
My income is fixed, meaning I’m retired so it’s stable now.
Income is stable, but since I get paid bi-weekly (26 times a year), there are 2
Months out of the year that have an extra paycheck.
Arnold
Its consistent for me
Our income is consistent, but need to stop the spending and start the savings.
My income is consistent I get paid every week through a part-time job that I work plus I get Social Security disability. I get that on the third of every month. However I definitely need to stop the spending start saving paying off medical bills and things of that nature.
Our incomes are consistent at the moment. We both earn good money so we should have plenty. Need to see our outgoings properly and make changes to spending habits.
Our income is very consistent—we live on one weekly paycheck. I wish I could figure out how to earn some extra, but I live with a chronic pain condition that makes committing to a job iffy.
Exactly what I thought, could use improvement
My income is pretty consistent and it’s exactly what I expected it to be.
income is definitely lower than I predicted!! This is why I need this!!!!
This made me realize how much money me and my wife makes, but also how much we waste.
$10 a week because I am 15 and can’t get a job and don’t have to spend money at anything because my parents do that.
The income was steady
All of my allowance goes to my bank account. It was higher than expected, but not that much money, either.
My money comes from my allowance and sometimes I get money from friends and family members. It is higher than I had thought.
My income is steady at the moment
I babysit during the week and on weekends. So, I am getting money but also when I get my own car paying for gas may be an issue. I have issues with saving money.
Higher than expected but not that much money
My income was steady.